Private equity firms are purchasing medical practices and hospitals across the nation. Why? Because there's a lot of money in healthcare and they're expecting large returns, Blue Ridge Public Radio reported Sept. 28.
Here are four things to know:
1. It's made care more efficient, some say. Kenneth Gregg, OD, president and medical director of Eyecarecenter in North Carolina, said after FFL Partners purchased the business, it rapidly added new practices but condensed the human resources, accounting and billing departments. It also brought in new technology and hired more technicians who are paid less than physicians.
2. The goal of the private equity firms is to grow the business and then sell it for a profit. When FFL Partners announced it was selling Eyecarecenter in 2019, it said it grew the parent company, EyeCare Partners, from 63 locations to over 450 in five years. It increased revenues by 65 percent every year.
3. Since 2006, private equity firms have invested $921 billion in U.S. healthcare, according to the American Investment Council. The Medicare Payment Advisory Council says private equity firms own 4 percent of U.S. hospitals and 11 percent of nursing homes.
4. Some physicians are concerned, such as Jane Zhu, MD, who studies private equity at Portland-based Oregon Health and Sciences University. She told Blue Ridge that such a large focus on making profits incentivizes private equity firms to make too many cuts, raise prices and perform unnecessary procedures. Additionally, when there's debt, the burden to pay it off is on the hospitals and practices.