Gary L. Azorsky,left, and Jeanne A. Markey,right, of Cohen Milstein Sellers & Toll. Courtesy photos
Who makes the decisions regarding your health care? Your doctor? Maybe not. And that is a growing problem. Today, though patients may not realize it, private equity’s footprint can be found most everywhere health care is provided: emergency rooms, hospital chains, general practitioners’ offices, cardiologists’ offices, home health agencies, nursing homes and more recently, even in behavioral health. Private equity firms have invested almost $1 trillion in hospitals and specialized practices over the last decade and there is no end to this surge in sight. The consequences of this seismic shift upon patient care and costs to the government payers are increasingly drawing scrutiny from industry observers.
This scrutiny derives from the inherent conflict between the interests of patients and the government health care plans, typically Medicare and Medicaid, on one hand, and the interests of PE firms and their investors on the other. Patients seek and the law requires that patients receive medically necessary treatment that is delivered in accordance with the judgment of licensed clinicians. Private equity firms seek, and their investors expect, an above-market rate of financial return when they acquire control of a company and, adhering to the private equity playbook, sell their interest in that company after several years.
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