Concerns over how private equity is affecting healthcare access, quality, and costs in the United States have exploded in the past few years, reflecting the growing activity of private investors in healthcare markets.
Private equity investors spent more than $200 billion on healthcare acquisitions in 2021 alone and $1 trillion in the past decade. These firms have long been active in hospitals, nursing homes, and home care settings. But recently, acquisitions of physician practices have skyrocketed, particularly in high-margin specialties like dermatology, urology, gastroenterology, and cardiology. A recent study revealed that in 13 percent of metropolitan areas, a single private equity firm owns more than half of the physician market for certain specialties.
Given their potential impact on the cost, quality, and access to healthcare in the U.S., these developments have generated considerable interest among federal and state policymakers.
The California Medical Association (CMA) is sponsoring a bill to strengthen California’s existing ban on the corporate practice of medicine. SB 351, authored by State Sen. Christopher Cabaldon (D-West Sacramento), aims to restore trust in California’s healthcare system and ensure that physicians maintain autonomy in patient care.
SB 351 will empower the California Attorney General’s office to investigate and intervene in cases where private equity firms unduly influence medical care. This legislation ensures that healthcare decisions are determined by patients and physicians, not profits.
While the risks of unchecked private equity involvement in healthcare are clear, alternative models exist that prioritize physician autonomy, patient experience, and clinical outcomes. One such model is Astrana Health, a physician-centric approach that allows doctors to maintain control over care delivery. This model not only preserves physician independence but also fosters better patient experiences, improved clinical outcomes, and higher physician satisfaction—a stark contrast to the profit-driven strategies of many private equity-owned healthcare groups.
To further explore the impact of private equity in medicine, LACMA will be hosting a virtual town hall this Fall to examine what’s driving this trend and discuss viable alternatives. As Howard Forman, M.D., of Yale University warns, “Most private equity money does seem to be making matters worse rather than better.” One major issue is that investors prioritize the healthiest and most profitable patients, exacerbating disparities and undermining health equity in an already deeply unequal healthcare system.
“Most private equity money does seem to be making matters worse rather than better.”
Further research supports these concerns. Harvard researchers found that patients in hospitals owned by private equity firms suffered significantly more hospital-acquired adverse events than those in comparable hospitals with no such investor participation.
With mounting evidence of the dangers of private equity influence in healthcare, initiatives like SB 351 and physician-led models such as Astrana Health represent critical steps toward protecting the integrity of patient care and ensuring that physicians—not investors—remain in charge of medical decisions. LEARN MORE
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