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How Private Equity is Raising Health Care Costs for Americans

October 12, 2021James SwannNo CommentsAHIPPatient Engagement & Access,Health Equity & Social Determinants of Health (SDOH)

Every American deserves high-quality, affordable health care, and yet health care is becoming unaffordable for far too many families. One driver behind the rising costs is the surge in physician practice acquisitions by private equity firms. The increased private equity purchases are driving up health care costs for Americans.

By 2018 private equity represented 45% of all health care mergers and acquisitions. Private equity firms borrow heavily from banks and others, using the funds to acquire private entities with the goal of turning a profit in a relatively short time. Initial private equity acquisitions targeted specialties like orthopedics, dermatology, urology, and gastroenterology, where potential profits were highest, but the firms are now expanding their targets.

Raising prices has been a common strategy after a private equity acquisition. A study found that hospitals have increased their prices after being acquired by private equity firms.

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: equity, health care costs, health costs, healthcare costs, patient access, private equity, SDOH

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