Private Equity Looting of U.S. Health Care: An Under-Recognized and Uncontrolled Scourge.

Abstract

Private equity investments in U.S. health care have become very common across more parts of our health care system than most physicians and other health professionals realize. The motivation in every case is to reap short-term profits for investors regardless of the consequences on patient care. These investments range from hospitals, emergency room services, and outpatient facilities to nursing homes and home care. Physician practices have been bought and sold in a number of specialties, including anesthesiology, dermatology, emergency medicine, gastroenterology, obstetrics-gynecology, ophthalmology, orthopedic surgery, and radiology. After leveraged buyouts using borrowed money, the typical modus operandi of private equity is to load the acquired asset with debt, cut costs as a way to increase revenues, press for unnecessary procedures, then sell the asset typically in three to five years. This article describes that process, including the harmful impacts of private equity on health care, and summarizes what is being done to rein in the exploitive practices of private equity ownership.