Study links private equity to poorer care

The takeover of healthcare services by private equity funds is associated with a worse quality of care and higher costs, according to the largest study ever undertaken on the effect of private equity ownership published in the BMJ, and regulation could be needed.

The authors of the review, which was led by the University of Chicago, said:

“The current body of evidence is robust enough to confirm that PE [private equity] ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting and possibly increased regulation.”

Private equity firms use money supplied by a combination of wealthy individuals and loans to buy companies, often ones that are struggling, with the aim to sell them at a large profit as quickly as possible (generally within 3-5 years). In order to make the profit quickly, the companies use a variety of approaches – breaking-up companies, merging small companies, selling off assets separately, making large numbers of redundancies, and generally cutting costs wherever possible.

In the past decade, these firms have increasingly invested in, acquired and consolidated healthcare facilities, with global healthcare buyouts exceeding £157bn since 2021 alone.

The systematic review in the BMJ – Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality – considered 1,778 studies and evaluated 55 studies with the correct inclusion criteria across eight countries, although with a heavy bias on the US market (47 studies). The researchers looked at studies in a range of healthcare settings, with nursing homes the most commonly studied, followed by hospitals, dermatology, and ophthalmology. The impact of private equity takeovers on costs, quality of care and health outcomes was assessed.

Full story in The Lowdown, 4 August 2023

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