Private equity investments in healthcare increase expenses, enhances treatment quality: Study

Washington DC [US], July 23 (ANI): A research team has discovered that private equity investments, which are becoming more prevalent in the healthcare industry, are typically linked to higher costs for patients.
The study was published in The BMJ. The study is regarded as the first systematic examination of trends in private equity ownership across the globe in the field of medicine.
“Over the last few decades, private equity activity in healthcare has exploded, with financial institutions buying up hospitals, nursing homes and fertility clinics — pretty much every area of healthcare,” said Joseph Dov Bruch, PhD, Assistant Professor of Public Health Sciences at UChicago, who is the study’s co-senior author. “News reports have highlighted increasing investment by private equity and a number of studies have set out to examine the phenomenon, but until now there has been no large systematic review of global private equity activity in healthcare. This study is intended to fill that gap.”
Private equity funding can come from multiple types of institutions, with different firms implementing varying investment strategies. As a result, Bruch said, the team wanted to review broad trends to gauge the impact on the healthcare sector as a whole rather than limiting the analysis to a specific setting.
Although the influence of the financial sector has grown across many fields, “private equity is uniquely interested in healthcare because of the many loopholes and cost-cutting strategies that exist within this industry,” said Bruch.
Performing a global search, Bruch and his research team found 55 previous academic research studies that investigated private equity in healthcare and performed a systematic review across four dimensions: healthcare quality, the cost to payers and patients, cost to healthcare operators and health outcomes. They found that in every studied healthcare setting, private equity acquisitions have increased in prevalence since 2000.
Across the four dimensions, private equity investment was most closely associated with up to a 32 per cent increase in costs for payers and patients. Private equity ownership was also associated with mixed to harmful effects on healthcare quality, while the impact on health outcomes and operator costs was inconclusive.
Proponents of private equity have argued that cash infusions from financial firms provide direct downstream benefits for patients. However, this hypothesis was not supported by the results of the team’s review. The authors did not identify any consistently beneficial impacts of private equity ownership.
“The fact that we are not seeing improvements means we’re not seeing clear indications that private equity makes healthcare more efficient by reducing administrative burden, streamlining processes or offering technology advances,” said Bruch.
The researchers hope the study will make healthcare providers, policymakers and members of the public more aware of the growing influence of the financial sector in the healthcare system. In addition, the team said, healthcare providers may need to pay more attention to the financial burden placed on patients. And the researchers said they believe their findings may spark greater policymaker discussion on antitrust regulation and corporate practice of medicine laws.
While patients may not be able to identify specific changes in the care they receive, Bruch said it is good to be aware that one’s hospital, nursing home, doctor’s office or fertility treatment centre may be owned by private equity and that these firms have specific financial targets that may inform care decisions.
“Private equity has been made to be a bogeyman,” said Bruch. “It certainly is an important financial actor growing in activity, and evidence suggests it should raise important concerns for patients, but it is a symptom of a health system that is becoming increasingly financialized.” (ANI)