Private equity drives up U.S. medical debt: report
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Private equity's expanding role in billing, tracking and collecting payments for health care is exacerbating America's medical debt problem, a new report from the Private Equity Stakeholder Project concludes.
Why it matters: PE-owned "end-to-end" service providers squeeze consumers at both ends, pushing medical credit cards and installment payment plans while aggressively pursuing debt collection.
- This tightening grip on health care's revenue cycle leaves private equity firms both "creating and profiting from medical debt," per the watchdog group, which tracks private equity's influence in the economy.
The big picture: Medical debt is the most common type of consumer debt Americans face, affecting about 14 million people who collectively owe at least $220 billion.
- It's become a talking point in a presidential campaign that's focused on working-class cost burdens.
What they found: Health systems have increasingly been outsourcing financial work to PE companies that have consolidated debt collectors, claims processing and billing into one-stop-shopping services, the report says.
- From 2014 to 2017, there were 10 to 20 acquisitions of so-called revenue cycle management businesses by private equity firms. The industry's interest in those businesses peaked in 2021 and 2022 with 45 deals each year. There were 31 such deals in 2023.
- This has "enabled aggressive debt collection" through the consolidation and scaling of debt collection companies.
Between the lines: Private equity has also embraced financing tools such as medical credit cards, installment loans and other payment products that come with high interest that can create additional burdens for patients.
- It's not clear patients always understand the terms of these products, per the Stakeholder Project.
The other side: Private equity interests have argued that PE investments strengthen U.S. health care, including by supporting medical research, improving health records and expanding and renovating rural facilities.
The bottom line: The report calls for more protections for patients, including bans on levying interest on payments due for patients who qualify for financial assistance and 2% caps on interest for patients who don't qualify.
- They also call for transparency around debt collector ownership data including judgment amounts, garnishments and home liens, and geographic information.
