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Scrutiny on private equity investment in health care increases

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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.

About Rick Kes

@HealthCare_CPA

Rick has over a decade of experience providing audit and consultative services predominately to organizations in the health care industry. He has served a wide variety services for organizations ranging from large organizations with more than $12 billion in annual revenue to small, standalone entities with less than $1 million in annual revenue. Rick has served clients across the health care continuum including integrated health systems, physician groups, safety-net hospitals, health insurance clients, and other various health care related entities. Rick has experience in governmental, not for profit, and statutory accounting standards.

Rick has played a role on several due diligence engagements as a dedicated health care professional resource. In 2018, he was selected as a senior analyst in RSM’s cutting edge Industry Eminence Program, which positions its senior analysts to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves. These senior analysts advise clients on conditions impacting middle market leaders.