Republished with full copyright permissions from The San Francisco Press.

Private-equity’s increasing influence in the American healthcare system has sparked deep concerns among elected officials, regulators, and citizens alike. With a federal probe underway to examine the impact of corporate greed in healthcare and over a dozen states seeking to bolster scrutiny of mergers and acquisitions in the healthcare sector, the implications of this growing stranglehold are coming into sharp focus.

A prominent example that highlights the complexities surrounding private-equity’s involvement in healthcare is the ordeal involving Cerberus Capital Management and the struggling hospital chain it owned. The company was faced with a challenging financial situation in the spring of 2020, prompting it to seek solutions that ultimately led to a significant impact on the healthcare landscape. The subsequent developments, including the Chapter 11 filing of Steward Health Care System, underscore the far-reaching consequences of such transactions.

An analysis of the aftermath of hospital mergers reveals troubling trends, such as significant increases in prices for essential healthcare services. These price hikes have substantial implications for national health spending, affecting both individuals and employers who bear the financial burden. Additionally, studies have pointed to concerning rises in adverse events among Medicare patients following the acquisition of hospitals by private equity funds, highlighting potential detrimental effects on patient care and safety.

The consequences of private-equity’s involvement in the healthcare industry extend beyond financial implications, raising notable concerns about patient well-being and the overall integrity of the healthcare system. The impact of these developments underscores the urgent need for careful consideration and oversight when evaluating the role of private-equity in healthcare.