The private equity conglomerate owns healthcare. And that is not a good thing.

https://childrenshealthdefense.org/defender/private-equity-united-states-healthcare-cd/

Before we get to today’s article, I have linked a substack I wrote last May.  It discusses the privatization of healthcare.  Most of you were not even aware this page existed back then, so linking this as it definitely has relevance to today’s post.   

When healthcare becomes “for profit”

Onward to today’s post.

Private equity firms are financial termites devouring the woodwork and foundations of the U.S. healthcare system.

Laura Katz Olson, Distinguished Professor of Political Science at Lehigh University, documents in her new book “Ethically Challenged: Private Equity Storms US Health Care”:

“PE [private equity] firms are gobbling up physician and dental practices; homecare and hospital agencies; mental health, substance abuse, eating disorder, and autism services; urgent care facilities; and emergency medical transportation.”

Private equity has become a growing and diversified part of the American healthcare economy. Demonstrated results of private equity ownership include higher patient mortality, higher patient costs, fewer jobs, poorer quality and closed facilities.

As I said in my post back in May 2022, the days of Mainstreet medicine are over.  As providers aged out into retirement, their practices were bought up for large sums of money by corporate healthcare.  Funded by private equity firms.  And THEIR goal is to make as much money from you as possible, running on skeleton crew staffing, and providing subpar care.  What are the consequences to these private equity pillages of healthcare facilities?

Consequences:

1. Consider Noble Health, a private equity-backed Kansas City startup launched in 2019. In rural Missouri, Noble acquired Audrain and Callaway Community Hospitals in the early days of the COVID-19 pandemic.  In March 2022, all hospital services ceased with the furlough of 181 employees.

2. Notes Kaiser Health News, “venture capital and private equity firm Nueterra Capital launched Noble in December 2019 with executives who had never run a hospital, including Donald R. Peterson, a co-founder who prior to joining Noble had been accused of Medicare fraud.”

3. St. Joseph’s Home for the Aged in Richmond, Virginia, as retold in The New Yorker.  A New Jersey private equity firm called the Portopiccolo Group bought the home, reduced stuff, cut amenities, and set the stage for a deadly outbreak of COVID-19” that included a doubling in patient deaths.

4. The number of stories of private equity-generated health system harm grows rapidly. And if the health part of the business goes bust, as occurred in 2019 at Philadelphia’s now-closed Hahnemann Hospital, the underlying real estate still offers rich rewards.

5. Patients at North Carolina-based Atrium Health get what looks like an enticing pitch when they go to the nonprofit hospital system’s website: a payment plan from lender AccessOne. The plans offer “easy ways to make monthly payments” on medical bills, the website says. You don’t need good credit to get a loan. Everyone is approved. Nothing is reported to credit agencies. Very high interest rates are standard, however.

6. In Minnesota, Allina Health encourages its patients to sign up for an account with MedCredit Financial Services to “consolidate your health expenses.” Very high interest.

7. In Southern California, Chino Valley Medical Center, part of the Prime Healthcare chain, touts “promotional financing options with the CareCredit credit card to help you get the care you need, when you need it.” As usual, very high interest rates.

It has impacted the mental health specialty now as well.  They used to focus on hospitals and medical clinics and urgent care.  Their sights are on psychiatry now.  The Private Equity Newsletter reports that psychiatrists, psychologists, clinical social workers once ran their own practices. Now the local therapist’s office could be controlled by a buyout king. Venture capitalists and private-equity firms are pouring billions of dollars into mental-health businesses, including psychology offices, psychiatric facilities, telehealth platforms for online therapy, new drugs, meditation apps and other digital tools.

Nine mental-health startups have reached private valuations exceeding $1 billion last year, including Cerebral Inc. and BetterUp Inc.

Demand for these services is rising as more people deal with grief, anxiety and loneliness amid lockdowns and the rising death toll of the COVID-19 pandemic, making the sector ripe for investment, according to bankers, consultants and investors.

They say the sector has become more attractive because health plans and insurers are paying higher rates than in the past for mental healthcare, and virtual platforms have made it easier for clinicians to provide remote care. “Since Covid, the need has gone through the roof,” said Kevin Taggart, managing partner at Mertz Taggart, a mergers-and-acquisitions firm focused on the behavioral-health sector. “Every mental-health company we are working for is busy. A lot of them have wait lists.” In the first year of the pandemic, prevalence of anxiety and depression increased by 25%, the World Health Organization said in March. About one-third of Americans are reporting symptoms of anxiety or depression, according to the Centers for Disease Control and Prevention.

The number of behavioral-health acquisitions jumped more than 35% to 153 in 2021 versus the previous year, and of those, 123 involved private-equity firms, according to Mertz Taggart. In the first quarter of this year, there were 41 acquisitions, of which 30 involved private equity firms. The push into mental health carries risks. A rush of private-equity firms could send prices for practices higher, reducing potential profits.

A risk for patients and clinicians is that new owners could focus on profits rather than outcomes, perhaps by pressuring clinicians to see more patients than they can handle. If care becomes less personal and private, patient care might also suffer.

Private equity-owned healthcare companies have also seen the following issues:

• Reduced staffing, or filling beds without adequate staffing ratios.

• Over-reliance on unlicensed staff to reduce labor costs.

• Failure to provide adequate training.

• Pressure on providers to provide unnecessary and potentially costly services.

• Violation of regulations required for participants in Medicare and Medicaid such as anti-kickback provisions, creating litigation risk.

If you can find a healthcare provider that is privately owned, operated, and independent, stick with them.  My office is 100% independent.  I am sure we have had some offers thrown our way to go corporate but all of us agree we refuse to do that.  We like the independent practice with no corporate structure mandating what we do.  We get to be actual providers treating patients as they should be, not some skeleton crew model that corporate mandates.