The increased scrutiny is notable and something private equity investors should be aware of.
As private equity groups continue to invest in the health care industry, their business practices are falling under increasing scrutiny from lawmakers, researchers and the news media. In 2018, for example, three Yale University researchers released a report that examined how out-of-network billing for emergency care in the United States can lead to surprisingly large bills for patients.
This research was cited in a communication issued this month by the House Energy and Commerce Committee discussing an investigation into practices of private equity firms and surprise billing. Also this month, Modern Healthcare had a series of articles and editorials discussing private equity investment in health care.
We have seen organizations like the American Medical Association conduct analysis on the effect of private equity and venture capital investment into health care provider organizations. Now it appears that industry-focused media and lawmakers are joining in the analysis as evidenced by bipartisan momentum around this idea. The increased scrutiny is notable and something private equity investors should be aware of. Private equity investment in health care has been on the rise and is predicted to increase. One reason is that many investors see health care as an industry insulated from trade uncertainty, as well as being less sensitive to an economic downturn.
