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Private Equity is Secretly Destroying U.S. Healthcare // Jimmy Dore
Jimmy Dore | Trusted Newsmaker
How Private Equity Is Quietly Wrecking U.S. Healthcare
The Pitch vs. the Reality
Private equity (PE) firms promise efficiency, capital, and “innovation.” What patients actually get is higher prices, thinner staffing, and a revolving door of providers forced to hit quarterly profit targets. The basic playbook isn’t medical—it’s financial: buy, lever up with debt, cut costs, boost revenue, then flip the asset in 3–7 years. That timeline is poison for a system that depends on continuity of care and long-term investment in people and safeguards.
The Playbook: Debt, Roll-Ups, and Billing Tricks
PE rarely buys one clinic and calls it a day. It “rolls up” dozens of physician groups in specialties with billing leverage—anesthesiology, emergency medicine, radiology, dermatology, gastro, women’s health—then negotiates from a position of market power. Debt service becomes a fixed tax on the practice, so managers chase higher-margin procedures, push volume, and squeeze labor. On the revenue side, they lean on out-of-network pricing, facility fees via hospital partnerships, and aggressive coding that inflates apparent complexity.
What the Evidence Says
Independent studies keep finding the same pattern: after PE buys a provider, prices go up and staffing thins. Hospital prices and charges rise faster post-acquisition; in nursing homes, PE buyouts have been linked to higher mortality, fewer front-line staff hours, and more preventable complications. In physician practices, consolidation raises commercial rates without commensurate quality gains. Patients don’t choose these deals, but they pay for them—through premiums, surprise bills, or longer wait times because fewer clinicians are covering more patients.
Emergency Medicine: Surprise Billing by Design
Two giants—TeamHealth and Envision—built PE-fueled EM empires by staffing ERs and staying out of network, then balance-billing patients who had zero choice in where an ambulance dropped them. The No Surprises Act curbed the worst of this, but the underlying model—extract maximum reimbursement at the point of vulnerability—didn’t spring from medicine; it’s a finance strategy mapped onto trauma bays.
Nursing Homes and Home Health: Cutting to the Bone
Long-term care is where cost-cutting truly turns deadly. When payroll is the biggest line item, the quickest “efficiency” is fewer CNAs per resident, fewer RNs per shift, and cheaper supplies. Short stays balloon into readmissions; small wounds become amputations. EBITDA improves. Outcomes don’t.
Physician Autonomy Erodes
PE ownership replaces professional governance with monthly dashboards: RVUs per hour, cases per day, “throughput.” Clinicians are nudged to upcode complexity, favor procedures over prevention, and shorten visit time. Say no often enough—to unsafe throughput, to medically unnecessary add-ons—and your contract won’t be renewed. The mission quietly flips from care optimization to payer extraction.
Why Patients See Higher Bills (Without Better Care)
Consolidation lets PE-backed groups demand higher commercial rates. Off-the-charts “facility fees” are tacked onto routine care as services migrate into hospital-owned settings. Contracting games push more services into out-of-network arbitration. Meanwhile, “cost savings” come from lower staffing ratios and cheaper supplies. The gap between what’s billed and what’s delivered widens.
Rural Hospitals on the Edge
When thin-margin rural hospitals are acquired and levered, any shock—payer dispute, volume dip—turns into a liquidity crisis. Closures strand entire counties; obstetrics, dialysis, and trauma care disappear. The community’s health risk becomes a line item in a lender’s covenant test.
Regulators Are Waking Up (Slowly)
The FTC and state AGs are scrutinizing serial “stealth” acquisitions too small to trigger Hart-Scott-Rodino thresholds but large enough in aggregate to dominate local markets. The No Surprises Act blunted ER balance billing, though arbitration quirks still reward high “benchmark” charges. Some states now require pre-clearance of practice roll-ups and private equity disclosures; others are drafting minimum staffing rules for nursing homes to prevent lethal “efficiencies.” It’s progress, but the enforcement gap remains big enough to drive a leveraged buyout through.
What Would Real Reform Look Like?
• Bright-line ownership rules for essential services (ER, NICU, trauma, nursing homes): if your business model depends on being there when people are most vulnerable, you shouldn’t be a 5-year flip.
• Aggregate-deal review: count serial acquisitions toward market-power thresholds and block roll-ups that would never pass as one big merger.
• Staffing floors tied to acuity, reported in real time, with penalties that actually exceed the savings from cutting corners.
• Site-neutral payment so a “facility fee” can’t be conjured by shifting a clinic across a hospital property line.
• Sunlight: public disclosure of ownership, debt loads, management fees, and related-party transactions so communities and payers can see where the money goes.
The Bottom Line
Healthcare isn’t a widget factory. When financiers treat it like one, patients get pricier, thinner, riskier care—and clinicians are conscripted into meeting leverage targets. If we want medicine to be organized around health rather than harvests of billable units, we need rules that reward care, not capital structure. Until then, private equity will keep doing what it was designed to do: extract value. The question is whether we’ll keep letting it extract that value from patients’ bedsides.
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