The Senate Homeland Security Committee, led by Sen. Gary Peters, has launched an inquiry into the operations of three major private-equity firms – Apollo Global Management, the Blackstone Group, and KKR – and their management of hospital emergency departments. This investigation follows concerns raised by emergency department physicians regarding patient safety and care, including issues such as improper billing, retaliation, and anti-competitive activities. The firms have been asked to provide documents and information by April 17, and to arrange a meeting with the committee by May 3.
NBC News has estimated that 40% of U.S. hospital emergency departments are overseen, staffed, or managed by companies owned by private-equity firms. This inquiry by the Senate Homeland Security Committee is the second investigation focusing on private equity’s impact on patient care, with the Budget Committee launching a bipartisan investigation in December. Recipients of the inquiry letters include four companies backed by the private-equity firms, including three hospital staffing companies and LifePoint Health, which operates acute care hospitals in multiple states. Private equity firms have become significant players in various sectors of the healthcare industry, with investments totaling $1 trillion in recent years.
Private-equity firms typically burden the companies they acquire with debt in order to increase earnings and appeal to new buyers within a few years. These cost-saving measures are central to the Senate inquiry, with concerns raised about how they may be affecting patient safety, quality care, and physicians’ ability to make independent judgments in providing care. Companies such as Apollo have expressed willingness to engage in discussions with the senators regarding their investments in the healthcare space, while Envision Healthcare and Lifepoint have also committed to transparency in responding to the inquiry.
As interest rates have risen, the costs associated with these company’s debt loads have become onerous, leading to financial difficulties. For example, last year, Envision Healthcare filed for bankruptcy while another emergency department staffing company, American Physician Partners, also collapsed. Private-equity firms’ involvement in healthcare has been associated with significant cost increases for patients and payers, lower quality of care, and higher mortality rates at nursing homes and hospitals they own. TeamHealth, another company under scrutiny, has stated their commitment to delivering high-quality, safe patient care.
At the Federal Trade Commission, private-equity firms’ healthcare deals are also facing scrutiny for potential anti-competitive activities. The FTC recently sued U.S. Anesthesia Partners Inc. and its private-equity backer, Welsh, Carson, Anderson & Stowe, accusing them of monopolizing the market, driving up prices, and generating profits. Private equity’s involvement in healthcare has raised concerns about the impact on the nation’s ability to respond to disasters and emergencies, with one emergency physician highlighting the risks associated with corporate control of medicine. The future implications of these investigations and the potential reforms in the private-equity healthcare sector remain to be seen.
