U.S. Government Begins Inquiry Into Corporate Ownership Trend in Healthcare

The U.S. Justice Department’s Antitrust Division, Federal Trade Commission (FTC), and U.S. Department of Health and Human Services (HHS) have jointly launched a cross-government public inquiry into private-equity and other corporations’ increasing control over healthcare.
 
Private equity firms and other corporate owners are increasingly involved in healthcare system transactions, and, at times, those transactions may lead to a maximizing of profits at the expense of quality care, according to the federal agencies. The cross-government inquiry seeks to understand how certain health care market transactions may increase consolidation and generate profits for firms while threatening patients’ health, workers’ safety, quality of care, and affordable healthcare for patients and taxpayers.

“When private equity firms buy out healthcare facilities only to slash staffing and cut quality, patients lose out,” FTC Chair Lina M. Khan stated. “Through this inquiry, the FTC will continue scrutinizing private equity roll-ups, strip-and-flip tactics and other financial plays that can enrich executives but leave the American public worse off.”
 
The agencies issued a Request for Information (RFI) requesting public comment on deals conducted by health systems, private payers, private equity funds, and other alternative asset managers that involve healthcare providers, facilities, or ancillary products or services. The RFI also requests information on transactions that would not be reported to the U.S. Justice Department or FTC for antitrust review under the Hart-Scott-Rodino Antitrust Improvements Act.
 
“Preserving competition in health care markets is a priority for the Justice Department because of its important impact on the health and well-being of Americans,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “This RFI will enable the agencies to accurately understand the modern market realities of the healthcare industry and forcefully enforce the law against unlawful deals. Hearing from patients, workers and market participants will be critical in developing future enforcement and policy efforts relating to consolidation in the healthcare sector.”
 
Research has shown that competition in healthcare provider and payer markets promotes higher quality, lower cost healthcare, greater access to care, increased innovation, higher wages, and better benefits for healthcare workers. Comments submitted in response to the joint RFI will inform the agencies’ enforcement priorities and future action, including potential regulations aimed at promoting and protecting competition in healthcare markets and ensuring appropriate access to quality, affordable healthcare items and services.
 
The agencies’ RFI builds upon the Centers for Medicare & Medicaid Services’ recent RFI on Medicare Advantage and a RFI issued by the FTC and HHS on the ways pharmaceutical middleman groups may be contributing to drug shortages. The RFI issued today stems from a December 2023 announcement outlining efforts by the U.S. Justice Department, FTC and HHS to lower healthcare and drug costs, while promoting competition to benefit patients and healthcare workers.

“Increasing competition in healthcare markets gives people more choices. Competition helps ensure patients have access to high-quality, lower cost care, and that healthcare workers receive higher pay and work under better conditions. And it saves taxpayers money,” HHS Secretary Xavier Becerra noted. “We need to do more to understand the impact of private equity and corporate dealmaking on our policymaking, regulatory decisions and enforcement actions.”
 
In addition to the launch of the RFI, all three agencies will also be participating today in a virtual public workshop that will explore the impact of private equity in health care and will discuss what the federal government is doing to address any harmful effects.
 
All market participants—patients, consumer advocates, doctors, nurses, healthcare providers and administrators, employers, insurers, and others—are invited to share their comments in response to the RFI. The agencies seek comments on a variety of transactions, including those involving dialysis clinics, nursing homes, hospice providers, primary care providers, hospitals, home health agencies, home- and community-based services providers, behavioral health providers, as well as billing and collections services.
 
The public will have 60 days to submit comments at Regulations.gov, no later than May 6. Once submitted, comments will be posted to Regulations.gov.