The FTC, DOJ, and HHS are investigating the impact that private equity transactions have on quality of care for patients, healthcare workers, and taxpayers.

FTC, DOJ, HHS launch probe into private equity transactions in healthcare

March 11, 2024
by John R. Fischer, Senior Reporter
The Federal Trade Commission, the Department of Justice’s Antitrust Division, and the U.S. Department of Health and Human Services have launched their cross-government public inquiry into how private equity mergers and acquisitions further consolidation and impact quality of care and outcomes for patients, worker safety, affordable healthcare access, and taxpayers.

Plans for the probe were initially announced in December by the Biden-Harris administration. As part of it, the agencies involved have issued a Request for Information (RFI), asking for public comments on deals conducted by health systems, private payers, private equity funds, and other alternative asset managers that involve healthcare providers, facilities, or ancillary products or services. The aim is to compare care quality before and after these transactions to develop future regulations and enforceable laws for reducing anti-competitive practices.

They also are requesting information on transactions that do not need to be reported to the Justice Department or FTC for antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act. The government maintains that private equity firms and other corporations, by engaging in these deals, are making a profit at the expense of quality healthcare and are reducing competition and slashing staff and services to save on costs.

“Increasing competition in healthcare markets gives people more choices. Competition helps ensure patients have access to high-quality, lower-cost care, and that healthcare workers receive higher pay and work under better conditions. And it saves taxpayers money,” said Health and Human Services Secretary Xavier Becerra, in a statement.

The agencies are seeking input on transactions involving dialysis clinics, nursing homes, hospice providers, primary care providers, hospitals, home health agencies, home- and community-based service providers, behavioral health providers, and billing and collections services.

While inquiries like this are based on claims of lower quality care and less financial stability for hospitals, experts say that evidence of this is not entirely clear. Rachel Werner, executive director of the Leonard Davis Institute of Health Economics and a professor at the University of Pennsylvania, who is not involved in the investigation, told HCB News back in January that empirical evidence is mixed and that there is no concrete proof that private equity ownership leaves hospitals in debt and has a negative financial impact on operations.

She also says that while evidence suggests that private equity ownership leads to consolidated markets, causing loss of competition and increased pricing, and that these firms are associated with cuts in staff and services, this does not suggest that quality of care is adversely affected.

In addition to the White House probe, the Senate Budget Committee initiated its own investigation in December, calling it the Private Equity Stakeholder Project (PESP). Just this month, the PESP released a report that recorded sustained interest for private equity investment in the healthcare sector, with a total of 1,135 deals in 2023. This included 148 buyouts, 259 growth or expansion investments, and 728 add-on acquisitions to 422 unique platform companies, and involved approximately 675 private equity firms, venture capital firms, and other investors. At least 22 private equity firms were involved in ten or more healthcare deals in 2023.

The report showed much activity in outpatient care, dental care, health IT, and medtech as well as biotech, pharmaceuticals, and medical aesthetics, but warned that the PE business model may lead to cost-cutting measures that impact patients and workers negatively. It calls for greater scrutiny of these acquisitions in healthcare by regulators and lawmakers.

The RFI in the White House probe complements those issued by the Centers for Medicare & Medicaid Services on Medicare Advantage and by the FTC and HHS on how pharmaceutical middleman groups may be contributing to drug shortages.

Patients, consumer advocates, doctors, nurses, healthcare providers and administrators, employers, insurers, and others are invited to respond to the RFI and will have until May 6 to submit comments at