How Profit Replaced Patients in U.S. Healthcare

In recent years private equity firms have quietly infiltrated the American healthcare industry at the expense of the American people and healthcare workers. PE firms involvement in healthcare comes with a litany of issues that need to be addressed. Including, but not limited to, increased healthcare costs, poor pay and working conditions for healthcare workers, diminished quality of care, lack of transparency from healthcare companies, and an increase in ethical violations. These issues stem from an industry shift from patient focused care to profit driven motive, primarily influenced by private equity companies. 

Healthcare costs and spending increase every year across the board. Increased costs of insurance, hospital care, and pharmaceuticals have drawn the eyes of many Americans. Yet, private equity’s involvement in the healthcare industry goes under reported. This is primarily caused by the convoluted corporate structure of the healthcare industry, and the lack of transparency provided by healthcare companies. PE firms have financial equity in news outlets and social media platforms, and finance super PACs that fund both sides of the political aisle. This allows them to control the narrative around their involvement in the healthcare industry and diminish awareness of the issue (Borsa, Bejarano, Ellen, Bruch)(Cai, Song). 

Since information on this topic is suppressed it is hard to find reliable sources, and most large media outlets do not cover it. To research this topic I used the provided readings, “These Are The Plunderers” by Morgenson and Rosner, and “The Next Shift” by Winant. I also used various governmental and scholarly readings I found online, and personal testimonies from people in the healthcare industry. “These Are The Plunderers”, delves into the rise of profit prioritization, and how it has affected consumers and employees alike. It also addresses the systemic failures that allow PE firms to continue their exploitative practices. Like how PE firms can essentially buy protection from regulation with financial contributions to policymakers and regulatory bodies. Morgenson and Rosner explain how the pure, unadulterated corporate greed shown by these firms has left people jobless, impoverished, and unsafe (Morgenson, Rosner). 

“The Next Shift” explains the transformation of the healthcare industry from a simple place of care to an economic powerhouse, contributing to the rise of the “profit over patients” model commonly seen in American healthcare today. Corporate restructuring to increase profits led to the exploitation of healthcare workers and diminished quality of care for patients. Winant highlights the overall shift from an industrial economy to a service based economy that primarily relies on the healthcare industry for economic prosperity and stability. The economic benefits the healthcare industry provides influence government officials to not regulate the cost of care at healthcare institutions, for fear of threatening jobs and economic stability. This gives healthcare executives the go ahead to continue their exploitative ways without much regulatory pushback. I have seen the effects of this in my own community. I am from Danville, Illinois, it used to be a prospering city that heavily relied on an industrial economy and most of the citizens were factory workers. Over time nearly all of the major factories in the city shut down and thousands of people lost their jobs. Now the largest employer and economic institution in the city is a hospital. Situations like this have happened all over America, causing lawmakers to fear regulating the healthcare industry too heavily (Winant).

The absence of regulation to make sure healthcare companies are prioritizing patient care has allowed PE firms to invade the healthcare industry. PE firms buy up a majority stake in a healthcare corporation, overhaul their entire company and push a for-profit model that hurts patients and healthcare workers. I have gotten to read emails from these PE executives and have heard first hand accounts of how they advertise to healthcare clinic owners. The clinic I work at has had PE firms offer to buy into the company multiple times. The PE firms only care about the return on investment. This was especially evident when in a meeting with someone I know, a PE firm executive said that my clinic’s appointment times were too long, and they should be cut down from a ninety minute initial assessment to only twenty minutes. This shows that they only have profit on their minds. The profit prioritization by these firms increase healthcare costs and leave healthcare workers underpaid, understaffed, and overworked. The way they acquire healthcare companies also has great consequences. Most of their acquisitions are through leveraged buyouts that cause financial instability and bankruptcy for many of the healthcare companies. Then these hospitals, clinics, and nursing homes have to close down leaving people without jobs, and a place to get the care they need (Cai, Song).

Since private equity’s involvement in healthcare has such a convoluted and complex framework it is difficult to provide a simple solution to the problem. Outright banning their involvement in the healthcare industry would be the obvious course of action, but unfortunately it would be impossible. Since the U.S. is a free market economy, the government is allowed limited intervention into private business, and PE firms would claim it is an infringement on economic freedom. To combat PE firms requires a multifaceted approach and a litany of regulations. There needs to be stronger oversight by lowering the reporting threshold for private equities’ acquisitions. The government needs to restrict their ability to do leveraged buyouts and excessive debt financing that leaves healthcare companies in financial ruin. Increase transparency and awareness of prices and patient outcomes in PE controlled healthcare centers. Increase the safeguards for healthcare workers in case their place of work fails, through things like PPP loans. These actions, among others, could hopefully disincentivize PE firms involvement in the healthcare industry (Cai, Song).  

Works Cited

Borsa, Alexander, et al. "Evaluating Trends in Private Equity Ownership and Impacts on Health Outcomes, Costs, and Quality: Systematic Review." BMJ, vol. 382, 2023, p. e075244. doi:10.1136/bmj-2023-075244.

Cai, Christopher, and Zirui Song. "A Policy Framework for the Growing Influence of Private Equity in Health Care Delivery." JAMA, vol. 329, no. 18, 2023, pp. 1545–1546. doi:10.1001/jama.2023.2801.

Morgenson, Gretchen, and Joshua Rosner. These Are the Plunderers: How Private Equity Runs—and Wrecks—America, Simon & Schuster, 2023, pp. 28–41.

Winant, Gabriel. “The Task of Survival.” The Next Shift, 2021.