Leveraging the Future of Healthcare: Private Equity’s Changing Role in Healthcare Delivery, Performance, and Quality

Abstract

Scholars, reporters, administrators, and clinicians alike have debated the benefits and detriments of private equity investment in healthcare for more than two decades. Yet, nearly all healthcare leaders agree that further consolidation is coming. While our healthcare system is quickly evolving toward value-based and population health-focused accountable care models, so too have private equity healthcare acquisitions become more prevalent and remunerative. Existing research on private equity’s healthcare impact is limited in scope, focusing primarily on nursing homes and long-term care facilities, and short in breadth, with only a handful of longitudinal case studies measuring financial performance and patient care quality in post-acute care settings. As a result, it will be increasingly imperative, both for healthcare practitioners and administrators, to continue analyzing the impact private equity has on healthcare organizations’ quality of care and financial vitality as this investment strategy becomes more common in the ambulatory, specialty physician practice, and acute care space.*

* This article was written before the onset of the novel coronavirus pandemic. The issues raised in the article, while not addressing directly the impact of the pandemic, will be of increased importance in the future as private equity firms (which have retained access to funds for investment) look for opportunities in a troubled healthcare industry, and as healthcare organizations look for ways to obtain necessary investment for their survival.