Private equity's involvement in healthcare has steadily grown over the last decade, which is a cause for concern, three employees of the Commonwealth Fund argued in a Harvard Business Review article.
Although private capital may spur innovation and provide physician offices the option to remain independent, it may also be driving healthcare costs up, the authors argued.
"Their common business model of buying, growing through acquisition or 'roll-up,' and selling for above-average returns is cause for concern," they wrote.
Several industry issues have called attention to private equity's involvement in healthcare, including surprise billing, which occurs when a patient is billed at an out-of-network rate despite going to an in-network facility.
Although there is bipartisan support to protect patients from surprise bills, various groups funded by large private equity-backed companies have lobbied against the legislation. So far it has worked, as bills have stalled in Congress.
The reason private equity firms want to block bipartisan legislation is because they have been buying and expanding the specialties that generate a disproportionate share of surprise bills, like emergency medicine, anesthesiology and radiology.
However, surprise billing isn't the only concern, the authors wrote. In addition, private equity-owned freestanding emergency rooms are also charging more for emergency care. In some instances, their treatment can be 22 times more expensive than a physician's office, the authors wrote.
The authors also had a warning for private equity firms: Don't profit at the expense of patients.
"However lucrative in the short run, private investor-backed companies that hurt consumers are not likely to perform well financially in the long term. Those that try to maximize their short-term profits by pushing up prices without adding real healthcare benefits are likely to find that those strategies are unsustainable," the authors warned.
The authors of the op-ed include the Commonwealth Fund's Lovissa Gustafsson, an assistant vice president; Shanoor Seervai, a senior research and communications associate; and David Blumenthal, MD, president of the organization.
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