Private equity investment in the healthcare sector is booming, and Democratic lawmakers are concerned, according to a report in The Wall Street Journal.
Private equity firms have been responsible for 56 percent of physician practice acquisitions since 2019, according to an American Hospital Association report, and PE firms are among the fastest-growing acquirers of healthcare groups. Bain & Co. reported private equity firms own at least 130 rural-serving hospitals.
When private equity firms invest in hospitals and physician practices, there are higher costs, according to research done by the University of Chicago and published in BMJ. The researchers examined 55 academic studies on private equity in healthcare and found that investment was associated with a 32 percent increase in costs for payers and patients.
Democrats have sought to to require medical companies to disclose private equity ownership, according to the Journal, but Republicans excluded the provision from recent Healthcare Price Transparency Act. Instead of attributing increased costs to private equity investment, Republicans see government regulations and lack of competition as the catalyst for higher healthcare prices, according to the report.
Lawmakers at the state level are also working on legislation that would require private equity ownership disclosure. Democrats in Pennsylvania introduced bills in May that would require healthcare providers to inform the state's attorney general of "significant financial changes," including private equity investment.
The American Investment Council, a lobbying group representing private equity firms, argued private equity firms create competition and benefit patients and physicians, according to the report.