## Big Money in Beds: States Fight Back Against Private Equity’s Grip on Healthcare 💊
Imagine a broken leg, a heart attack, or even a routine check-up. Now imagine that your access to quality care hinges not on your health needs, but on the financial interests of a faceless corporation.
That’s the reality for millions facing healthcare costs skyrocketing while hospitals struggle under the weight of private equity investment. From squeezing profits to prioritizing shareholder gains over patient well-being, the influence of private equity in healthcare is under increasing scrutiny.
But there’s a growing movement pushing back. States are taking action, attempting to limit the influence of these powerful investors and ensure that healthcare remains a right, not a commodity.
The Role of State Attorneys General in Addressing Anti-Competitive Practices
State attorneys general have become instrumental in addressing anti-competitive practices in the healthcare industry. Their efforts have been crucial in shedding light on the impact of consolidation on healthcare costs and access. A prime example of their efforts is the case of Sutter Health, a large healthcare system in California, which was investigated by HHS Secretary Xavier Becerra, then Attorney General of California, for its anti-competitive pricing practices.
As Attorney General, Becerra’s office found that Sutter Health’s consolidation of medical practices had led to higher prices for patients and reduced competition in the market. The investigation highlighted the need for stronger anti-trust oversight and led to a lawsuit against Sutter Health. While the case is ongoing, it underscores the critical role that state attorneys general can play in promoting competition and protecting consumers in the healthcare industry.
State attorneys general have also been at the forefront of addressing the impact of private equity on healthcare costs. Private equity firms have been involved in numerous hospital mergers and acquisitions, leading to increased consolidation and higher prices. By investigating these practices and taking enforcement action when necessary, state attorneys general can help to promote competition and protect consumers from anti-competitive practices.
The Politics of Healthcare Reform
The Biden Executive Order: A Sleeper Health Cost Policy
President Biden’s executive order instructing agencies to develop policies to promote competition in the economy has received little attention, but it has significant implications for healthcare reform. The order could lead to new efforts to control health costs by stemming consolidation in the healthcare industry and promoting competition to drive down prices.
The research is clear that consolidation in the hospital industry drives up costs, with some studies suggesting that consolidation can lead to price increases of up to 50%. Moreover, consolidation does not necessarily improve quality of care, and insurers and employers are often unable to negotiate lower prices with hospitals or establish narrower networks when one or two hospital systems dominate the market.
The Potential for Bipartisan Support
Despite the partisan divisions that often characterize healthcare reform, there may be opportunities for bipartisan support for policies aimed at promoting competition and reducing healthcare costs. A more aggressive policy approach to addressing anti-competitive mergers and consolidation in the hospital industry could appeal to both Democrats who favor regulation and Republicans who favor competitive markets.
For example, a recent survey found that 71% of voters believe that the healthcare system is rigged against them, and 67% believe that the system is too complex and confusing. These sentiments suggest that there may be a bipartisan appetite for policies that promote competition and reduce healthcare costs.
The Resistance from the Hospital Industry
However, any effort to promote competition and reduce healthcare costs is likely to face fierce resistance from the hospital industry. Hospitals have been sitting on the sidelines while policymakers have focused on addressing drug costs, which represent just 10% of healthcare spending. Meanwhile, hospitals account for 34% of healthcare spending and have been driving up costs through consolidation and anti-competitive practices.
The hospital industry will likely resist any efforts to promote competition and reduce costs, but policymakers must not let them succeed. By taking a more aggressive policy approach, policymakers can help to promote competition, reduce healthcare costs, and improve access to care for consumers.
Implications for Healthcare Costs and Access
The Impact of Private Equity on Healthcare Costs
Private equity firms have been involved in numerous hospital mergers and acquisitions, leading to increased consolidation and higher prices. The research is clear that consolidation in the hospital industry drives up costs, with some studies suggesting that consolidation can lead to price increases of up to 50%.
The impact of private equity on healthcare costs is not limited to price increases. Private equity firms often prioritize short-term profits over long-term investments in healthcare quality and access. This can lead to reduced investment in technologies and services that improve patient outcomes, such as telemedicine and behavioral health services.
The Effect on Quality of Care
Consolidation in the hospital industry does not necessarily improve quality of care. In fact, some studies have found that consolidation can lead to reduced quality of care, as hospitals focus on reducing costs and increasing profits rather than investing in quality improvement initiatives.
The impact of private equity on quality of care is also a concern. Private equity firms often prioritize short-term profits over long-term investments in healthcare quality and access. This can lead to reduced investment in quality improvement initiatives, such as training programs for healthcare professionals and investments in electronic health records.
The Need for a More Aggressive Policy Approach
The need for a more aggressive policy approach to addressing anti-competitive mergers and consolidation in the hospital industry is clear. Policymakers must take action to promote competition, reduce healthcare costs, and improve access to care for consumers.
This will require a range of policy initiatives, including strengthened anti-trust oversight, investments in healthcare infrastructure, and support for community-based healthcare providers. By taking a more aggressive policy approach, policymakers can help to promote competition, reduce healthcare costs, and improve access to care for consumers.
Practical Steps Forward
Recommendations for the White House Competition Council
The White House Competition Council has a critical role to play in promoting competition and reducing healthcare costs. The council should recommend a range of policy initiatives, including strengthened anti-trust oversight, investments in healthcare infrastructure, and support for community-based healthcare providers.
The council should also work to identify opportunities for bipartisan support for policies aimed at promoting competition and reducing healthcare costs. By building a broad coalition of support, policymakers can help to promote competition, reduce healthcare costs, and improve access to care for consumers.
Potential Administrative and Legislative Actions
Policymakers have a range of administrative and legislative tools at their disposal to promote competition and reduce healthcare costs. These include strengthened anti-trust oversight, investments in healthcare infrastructure, and support for community-based healthcare providers.
Administrative actions, such as strengthened anti-trust oversight and investments in healthcare infrastructure, can be taken without the need for congressional approval. Legislative actions, such as the passage of new laws and regulations, will require congressional approval and may be more challenging to achieve.
The Role of Key Stakeholders in Driving Change
Key stakeholders, including healthcare providers, insurers, and patient advocacy groups, have a critical role to play in driving change and promoting competition in the healthcare industry.
Healthcare providers, such as hospitals and medical groups, must prioritize quality and access over profits and consolidation. Insurers must prioritize competition and affordability over profits and market share. Patient advocacy groups must prioritize the interests of consumers over those of special interests.
By working together and prioritizing the interests of consumers, healthcare providers, insurers, and patient advocacy groups can help to promote competition, reduce healthcare costs, and improve access to care for consumers.
Conclusion
States Take Aim at Private Equity in Healthcare
In a bid to strengthen their healthcare systems, several states are taking a stance against private equity (PE) investments in the industry. This shift is a response to concerns that PE firms are prioritizing profits over patient care, driving up costs, and compromising the quality of care. States are taking steps to limit the influence of PE firms, which are often linked to large healthcare conglomerates.
The trend is not new, as states have been exploring alternative funding models to support their healthcare programs. Some states, like California, have introduced legislation that restricts PE investments in healthcare providers. Others, like New York, have taken a more nuanced approach, allowing PE firms to invest in healthcare companies as long as they meet certain conditions. While these measures aim to mitigate the negative impact of PE on the healthcare system, they also raise questions about the long-term consequences of these restrictions.
The implications of this trend are far-reaching, as it may impact the future of healthcare delivery, particularly in underserved communities. States that adopt stricter regulations on PE investments may be better equipped to address issues of healthcare access, quality, and affordability. However, this shift also underscores the need for ongoing vigilance and reform to ensure that healthcare systems remain responsive to the evolving needs of their populations.
As the healthcare landscape continues to evolve, it is essential to strike a balance between promoting competition and protecting patient care. The future of healthcare will be shaped by the interplay between market forces, regulatory bodies, and the innovative solutions that emerge from the intersection of these factors. Ultimately, the success of these efforts will depend on the ability of policymakers to navigate the complex trade-offs and prioritize the well-being of their citizens.