When nursing homes and doctors’ offices emphasize profits over patient care, patients suffer. There are multiple recent studies about the effects of private equity investments within the healthcare industry. All seem to have one thing in common – the finding that private equity ownership benefits the investors, often at the expense of quality patient care.
What is Private Equity and How Can it Affect Patient Care?
Private equity is the term used when investors pool money to acquire an ownership interest in a company. Unfortunately, studies suggest that private equity ownership can change the overall goal of a healthcare facility from affordable, quality care to high-profit turnarounds for investors.
Many times, private equity investing focuses on short-term, high revenue generation. The focus on revenue generation often means that quality patient care takes a back seat.
“The American Medical Association has noted that private equity limits the autonomy of doctors—interfering with doctor-patient relationships—the core of our healthcare system,” an American Antitrust Institute Report reads.
Nursing homes and doctors’ medical practices have been a target of private equity firms. An estimated 10% of nursing homes in the U.S. are now owned in some way by private equity firms.
Declines in measures of patient well-being in healthcare facilities were observed such as:
- The number of nursing staff
- The amount of time nurses and staff spend with each patient
- The use of nurse practitioners instead of doctors
- Lack of training for nurses and other medical staff
- Higher costs for patients
- Predatory billing practices such as surprise medical billing
- An overall lack of compliance with standards of care
All the examples listed above are strategic moves often implemented by private equity managers to cut costs. Unfortunately, the private equity industry lacks transparency and accountability because it is largely unregulated under state or federal law.
The bottom line is that private equity managers are typically focused on the profitability of a medical care facility such as a physician’s office or nursing home – not on the quality of care provided.