Private equity acquisitions in healthcare have grown substantially in recent years, with more than 480 hospitals (about 23% of all for-profit hospitals) now under private equity ownership. At the same time, U.S. veterans are increasingly receiving healthcare outside of facilities run by Veterans Affairs (VA), through the VA’s “Community Care” program.
At a roundtable event hosted by the House Committee on Veterans’ Affairs, a group of health policy experts, including the Lown Institute’s Judith Garber, convened to discuss the effects of private equity growth on the health of veterans.
Veteran visits to PE-owned hospitals cost $650 million
To open the session, researchers from Harvard University and Brown University shared new research on veterans’ care delivered at PE-owned hospitals. They found that in 2024, the VA paid for 55,000 hospitalizations and emergency department visits for veterans at hospitals owned by PE firms. This was a 20% increase in visits from just two years prior. The VA and Medicare collectively spent about $650 million on hospital care for veterans at PE-owned hospitals in 2024.
Private equity and social responsibility
Because private equity firms are looking to maximize short term profit, they usually saddle the company they acquire with a ton of debt, and they can make money even if the company they acquire fails. (See our explainer for more on how private equity works.)
A growing body of research shows that PE acquisitions in healthcare are associated with higher costs but mixed effects on quality. For hospitals, PE acquisitions are linked to worse patient safety and patient satisfaction outcomes. For physician practices, PE ownership may impact the services that these practices perform, with an increase in more expensive (sometimes unnecessary) services, and a decrease in some unprofitable services.
“The justification for private equity getting into healthcare is efficiency, but we’re not seeing that gain in our metrics.”
Judith Garber, MPP, Lown Institute
When private equity acquires hospitals that serve large communities of low-income patients, there can be negative consequences on health equity. Lown Institute Senior Policy Analyst Judith Garber shared results from the Lown Hospitals Index that support this idea. Hospitals systems owned or recently owned by PE did poorly on metrics for outcomes and value on the Lown Index, but fairly well on measures of inclusivity. This indicates that hospitals serving communities of color and low-income communities—which provide essential health services to those who need them most—are susceptible to PE takeover. Safety net hospitals that are struggling financially could be vulnerable to being scooped up by a private equity firm, which can make a quick profit by selling the real estate or cutting staff.
“That’s what we saw with the Steward system in Massachusetts that went bankrupt, where a lot of those hospitals were safety net hospitals,” said Garber. “From a health equity point of view, this is an important issue.”
How can we protect veterans from private equity in healthcare
Roundtable participants mentioned several solutions to increase oversight over private equity, including:
- Speeding up the process for bringing claims under the False Claims Act. These cases often take so long that by the time the case actually starts, PE firms have already sold the healthcare company (and taken their money with them).
- Improve enforcement for compliance with CMS’ nursing home ownership reporting. Currently, lags in the data and lack of incentives to comply lead to spotty reporting, making it hard to know which nursing homes are PE-owned.
- Make it harder for PE to siphon off profit by changing tax laws and requiring the PE firm to share in the risk financially.
- Banning hospitals from selling their property to real estate investment trusts, as Massachusetts has done, to stop PE firms from using real estate sales to make a quick buck from healthcare organizations.
Experts also recommended addressing broader issues in healthcare that PE has been exploiting, such as consolidation. Better regulation of mergers and acquisitions, improving ownership transparency, and removing barriers to competition like physician non-compete clauses would help improve healthcare competition in general.
“The reason that PE firms are in healthcare in the first place is because of the incentives in our system,” said Garber. While short-term interventions are helpful, to solve the problem of PE growth in the long term, we have to incentivize patient care over profits for all healthcare institutions.