While healthcare and political leaders continue to address "corporate greed and private equity abuse" in healthcare, a July 8 PitchBook report found that PE's investment in healthcare is "vastly overstated."
The report, Quantifying PE Investment in Healthcare Providers, used data from PitchBook, third parties, frequent private equity investor interactions with PitchBook, companies backed by private equity, and a range of service providers across the private equity ecosystem.
Here are six takeaways from the report:
1. Providers backed by private equity make up less than 4% of the U.S. healthcare provider revenue ecosystem.
2. Growth year over year for the total number of private equity-backed companies has slowed in the last six years, falling under 1% in the first quarter of 2024.
3. More than half of all physicians and over 70% of all employed physicians are hospital employed, which means that physician employment growth is not driven primarily by private equity.
4. Hospital and skilled nursing facility existing private equity deal activity is close to zero. In fact, a major private equity investment in a U.S. health system or hospital has not happened since 2018, the report said.
5. Private equity investors are not investing out-of-network currently. "While investors chased higher out-of-network rates in the past, they now avoid them assiduously in categories including acute-care physician staffing, SUD treatment, and EMT," the report said.
6. The total annual U.S. spending on healthcare providers is estimated to be around $3.5 trillion in 2024, according to CMS' National Health Expenditure data. Hospital provided care makes up $1.6 trillion of that amount with aggregate revenue of private equity-backed healthcare providers coming in at $116.6 billion for 2024.