Investors or Patients: Who Does Private Equity Serve?

February 17, 2025

Healthcare for all people has been the mission of hospitals for nearly two millennia. Financial considerations have always been necessary, however, profit has never been their purpose. In recent years, particularly following the pandemic, Private Equity investment groups (PE) have complicated this issue, generating significant concern. Studies, Homeland Security inquiries, media scrutiny, and new legislation all challenge the compatibility of Healthcare and Private Equity.

An Inquiry: Profit over Patients?

On April 1, 2024, Senator Gary Peters, Chairman of the bipartisan Senate Committee on Homeland Security, issued information requests to the nation’s largest Emergency Medicine staffing companies and the Private Equity groups that own them^[1]. Major news outlets, industry leaders, and other governmental bodies made similar inquiries. All have struggled to identify accountable parties within the ownership structure of these companies. Their question, however, is clear: are Private Equity groups risking patient health and even national security for short term profits?

Preceding events

Physician interviews prompted Senator Peters’ inquiry. The reason for these interviews is not apparent, however, a look at recent events surrounding Private Equity in healthcare provides some clues. Negative patient outcomes^[2], hospital closures^[3], surprise billing^[4], bankruptcies^[5.1], rising costs^[5.2], and unfavorable public perceptions seem to surround Private Equity run Healthcare.

In addition to the events above^[5], a closer look at a specific PE medical staffing group is also informative…

Envision ownership history highlights^[6]

Understanding Private Equity

Government inquiries and media coverage have focused on recent, high-profile events surrounding Private Equity. Determining the appropriate path forward for healthcare requires a deeper understanding of Private Equity groups, their goals and strategies. PE groups publish openly on the matter^[7], their goals and strategies can be summarized:

Goal	Strategy
Generate returns for investors, while maintaining their privacy.	Acquire an asset, leverage capital and debt to execute plans to increase its market value, sell the asset within 5-15 years.

In addition to PE firm marketing, the annual Healthcare Private Equity and Finance Conference^[8]also provides insights. The HCPE is organized by McGuireWoods, a prominent law firm representing PE. Conference highlights make it clear: PE firms are contemplating the current situation and concluding it may be wise to transition to other niches of healthcare to meet their goals. The event’s agenda and highlights plainly indicate a few points:

Private Equity is well aware of its negative image, but individual firms are unwilling to speak directly to the issues
Recent scrutiny and potential regulation are not good for Private Equity
Other areas, such as Health IT, are becoming more attractive
Returns for investors remain the primary focus, not patients

With likely increases in scrutiny and regulation, Private Equity is reconsidering its relationship with healthcare staffing. It may be time for hospitals to reconsider their relationship with Private Equity staffing.

Dedicated staffing partners

While Private Equity groups staff the largest share of Emergency Departments, they are not the only option. Practice groups dedicated to supporting healthcare, undistracted by the need to generate investor returns, offer a more patient-centric model. For over 35 years, STATUS has been owned and operated by veteran Mark C. Menadue, DO, JD, FACEP, FCLM, President/CEO from offices in central Iowa. Focusing on rural, Midwest hospitals, STATUS has partners, not a portfolio. When these physicians and facility partners thrive, so does STATUS. When physicians and hospitals choose organizations like STATUS, they contribute to our shared purpose, supporting Community Health, as well as maintain sustainable options in healthcare staffing.

References

1. [US Senator] Peters Seeks Information About Private Equity Run Emergency Departments and Impact on Patient Care

https://www.hsgac.senate.gov/media/dems/peters-seeks-information-about-private-equity-run-emergency-departments-and-impact-on-patient-care/

2. Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

https://jamanetwork.com/journals/jama/fullarticle/2813379#google_vignette

3. Private equity’s appetite for hospitals may put patients at risk

https://hsph.harvard.edu/news/private-equitys-appetite-for-hospitals-may-put-patients-at-risk/#:~:text=After%20months%20of%20tense%20negotiations,with%20new%20providers%20farther%20away.

4. An examination of surprise medical bills and proposals to protect consumers from them

https://www.healthsystemtracker.org/brief/an-examination-of-surprise-medical-bills-and-proposals-to-protect-consumers-from-them-3/

5. Concerning Events Surrounding Private Equity in Healthcare

5.1 State of the US Emergency Medicine Employer Market – March 2024; A Private Equity

https://emworkforce.substack.com/p/state-of-the-us-emergency-medicine-677

5.2 Private Equity’s Role in Health Care

https://www.commonwealthfund.org/publications/explainer/2023/nov/private-equity-role-health-care#:~:text=The%20second%20change%20relates%20to,or%20intensively%20in%20health%20care.

5.3 Private Equity Harms Patients & Provider

https://pnhp.org/news/private-equity-harms-patients-providers/#:~:text=Whitehouse%20said%2C%20%E2%80%9CAs%20our%20investigation,to%20pick%20up%20the%20pieces.%E2%80%9D

5.4 Another Emergency Medicine Staffing Firm Goes Under – Doctors still not paid, now on the hook for malpractice tail coverage

https://www.forbes.com/sites/elliekincaid/2018/05/15/envision-healthcare-infiltrated-americas-ers-now-its-facing-a-backlash/

6.5 Clayton, Dubilier & Rice Completes $3.2 Billion Acquisition of Emergency Medical Services Corporation

https://www.cdr.com/news/clayton-dubilier-rice-completes-32-billion-acquisition-of-emergency-medical-services-corporation

6.6 Envision Healthcare Holdings files for IPO of up to $100 million

https://www.reuters.com/article/business/envision-healthcare-holdings-files-for-ipo-of-up-to-100-million-idUSL3N0EP4BC/#:~:text=By%20Reuters,offering%20or%20their%20expected%20price.

6.7 Envision Healthcare, AmSurg to Merge; AmSurg Corp Merges with Envision Healthcare

https://www.mcguirewoods.com/client-resources/alerts/2024/5/key-takeaways-from-the-2024-healthcare-private-equity-and-finance-conference/

9. Federal investigation into private equity hospital staffing, patient care in Southern Colorado

https://krdo.com/news/2024/04/09/federal-concerns-mount-over-private-equity-hospital-staffing-patient-care-in-s-colorado/

SHARE IT

News &

Advice

Advice, insights, and news from our team.