Apr 10, 2024 - Health

Private equity in health care becomes a bigger Washington target

Illustration of a health plus with darts all around it, as if they've missed the target.

Illustration: Aïda Amer/Axios

Congress is ramping up oversight of private equity's influence in health care, though lawmakers don't appear ready to give government more power to halt deals.

Why it matters: Health care has been a magnet for private equity deals, even as growing data suggest its ownership of hospitals and physician groups has led to reduced staffing levels and worse patient outcomes.

State of play: Parallel investigations by three Senate committees are focused on the industry's growing influence on hospitals, emergency care and opioid treatment.

  • Sen. Ed Markey (D-Mass.) raised the stakes with a discussion draft last week that would require private equity firms to be licensed before investing in health care, giving Health and Human Services significant power to stop transactions from happening.
  • It also includes a slew of new transparency requirements for health care entities owned by private equity firms.
  • Plans to bestow major new federal government power over business transactions is likely to raise red flags for Republicans. Senate health committee Chair Bernie Sanders (I-Vt.) isn't committing to holding hearings on the plan.
  • Markey's plan is based in part on a House measure from Rep. Pramila Jayapal (D-Wash.) that hasn't attracted any Republican cosponsors.

The congressional attention comes amid increased concern over health care consolidation that prompted the Federal Trade Commission, Justice Department and HHS last month to open an inquiry into private equity and corporate ownership in the medical marketplace.

  • The Biden administration, which reportedly launched an antitrust probe of health insurance giant UnitedHealth Group, has so far had limited success challenging health care mergers, with the exception of blocking some hospital deals.
  • "We expect to continue seeing actions here, particularly in the run-up to the election," Raymond James analyst Chris Meekins wrote in a note.

The other side: The private equity industry is expected to vigorously fight back. The American Investment Council told Axios last week that "headline-seeking politicians continue to place misguided blame on our industry instead of pursuing sound policymaking to address systemic challenges head-on."

Yes, but: There is some Republican interest in the issue, mainly around the investigations of how PE ownership, with its focus on short-term profits, is influencing patient care.

  • Sen. Mike Braun (R-Ind.) and Rep. Don Bacon (R-Neb.) joined Markey last month in investigating the role of private equity in potentially limiting access to methadone in opioid treatment programs.
  • Sen. Chuck Grassley (R-Iowa), the ranking member of the Senate Budget Committee, joined chair Sheldon Whitehouse (D-R.I.) in December in investigating the role of private equity ownership of hospitals.
  • Senate Homeland Security Committee Chair Gary Peters (D-Mich.) is also investigating the role of private equity ownership in emergency room care, though no Republican is on board right now.

What's next: Markey says he is still gathering input on the discussion draft, which grew out of the private equity–linked financial crisis of Steward Health Care hospitals in Massachusetts.

  • "My Health over Wealth Act would establish guardrails that stop corporate greed from affecting access to care by protecting patients and providers and creating transparency and accountability," Markey said in a statement to Axios.

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