Patients have the right to know if private equity owns their healthcare

Americans should be able to know who controls their health care choices. The American health care system is littered with various for-profit organizations seeking to make as much money as possible, often at the expense of people's well-being. As private equity firms prey on healthcare providers, the ability for patients to identify the worst parties and make informed choices about their own care becomes increasingly important.

Fortunately, in November 2023, the Centers for Medicare and Medicaid Services (CMS) finalized rules that will increase transparency for millions of Americans: seniors. This rule requires all health care providers enrolled in Medicare, and therefore all health care providers who wish to receive taxpayer funds from the Medicare program, to determine whether their company is owned by a private equity company (PEC). It is mandatory to disclose.

After the original proposed rule required private equity disclosures only for skilled nursing facilities, CMS argued that PECs were manipulating the provision by pointing out that PECs were buying nursing facilities, leading to higher costs and lower quality. Incorporated into. At the same time, CMS recognized that the problem of PEC harming health care extends far beyond nursing homes. By May, CMS proposed extending the requirement to report PEC ownership to all healthcare providers and suppliers enrolled in Medicare. This includes local hospitals, skilled nursing facilities, home health agencies, hospice providers, and more. This proposal has been completed as a final rule.

CMS is correct about the pervasive nature of private equity ownership in health care. Since the 2010s, private equity firms have been acquiring and consolidating areas across the health care system, including nursing homes, hospitals, emergency rooms, independent practices, behavioral health companies, and more.

Private equity buys companies and typically tries to generate as much profit as possible over three to five years before selling them. They advocate enabling businesses to reach their full potential by increasing efficiency and eliminating waste. In health care, this means running health care like a profit-maximizing business rather than according to the primary mission of making Americans healthier.

In addition to not producing particularly good returns for investors, private equity firms are looting America's health care and damaging the health of Americans. Residents of private equity-owned nursing homes have a higher risk of death, are more likely to visit emergency rooms and be hospitalized, and face significant cost burdens. Private equity ownership across American healthcare has higher costs and worse outcomes.

Consider the case of hospice. Medicare pays hospice providers a flat rate per patient per day. Hospices make “profits” by maintaining the difference between what they receive and what they spend. Private equity-owned hospices target patients who do not need hospice or require less intensive care (e.g., dementia patients) and collect as much tax money as possible. We also reduce costs by lowering the quality of care, such as reducing the number of home visits, even on the last day of a person's life.

Ultimately, the new CMS rule is an important step toward increasing transparency, allowing governments and researchers to better track and study the impact of private equity ownership across the health care system. However, there are still significant limitations regarding how quickly CMS can collect information and whether it is accessible to the public.

Providers and suppliers must complete relevant forms when they first enroll in Medicare and every five years thereafter. Therefore, it will take up to five years for CMS to catalog all private equity owned providers. Additionally, CMS has not formally committed to adding his PEC data to publicly accessible databases. CMS expanded its hospice and home health database last year to include ownership details, so we hope it won't be a stretch to demand a full commitment to transparency.

CMS has the ability to force a provider to fill out a form before requesting “off-cycle revalidation.” In fact, the agency specifically made clear it was interested in doing so for skilled nursing facilities in a rule finalized in November. Just as the agency itself expanded his PEC disclosures to all providers, so should its intent to use off-cycle revalidation to increase transparency.

Ideally, policymakers would eliminate private equity from health care. In fact, Sen. Sheldon Whitehouse (D.R.I.) and Sen. Chuck Grassley (R-Iowa) have launched a bipartisan investigation into its role in health care. The Federal Trade Commission (FTC) has targeted private equity acquisitions, including suing Welsh, Carson, Anderson & Stowe for illegally acquiring and consolidating an anesthesiology practice in Texas.

As long as private equity continues to play an important role in American health care, Americans should have the right to know which hospitals, hospices, and other health care providers are owned by private equity. Armed with this knowledge, people can avoid wolves in sheep's clothing by simply pledging to help, with little concern for their health.

Brandon Novick is a program outreach assistant on the national team at the Center for Economic Policy Research in Washington, DC. Prior to joining CEPR, he was responsible for policy, communications and management work for non-profit and political campaign organizations aimed at ensuring appropriate standards. life.