ICYMI: WSJ Highlights How Information about Private Equity Investments in Health Care is Widely Available
Today, the Wall Street Journal published a story examining how legislation requiring onerous disclosures of private equity investments in the health care sector is receiving substantial pushback from both industry groups and some members of Congress.
The American Investment Council has been front and center in this debate, advocating that information about private equity investments is widely available:
- “Other lawmakers have questioned the disclosure push on the grounds that much private-equity ownership information in the healthcare sector is already public. The Health and Human Services Department and Medicare administrators already have the power to ask for ownership information, and under the Biden administration have been publicizing more data.”
The AIC highlighted that private equity investments help health care providers focus on patient care and foster innovative competition in the sector:
- “The private-equity industry has pushed back against such disclosure efforts while also rebutting claims that industry investments contribute to degradation of medical care. On July 27—the day after the House Ways and Means markup session—the American Investment Council, a private-equity lobbying group, released a report arguing that investment firms create competition and help expand access to care.”
- “Private-equity investments are improving the healthcare system, and we are working to make sure members of Congress understand the importance of this investment in their own local communities,” said Emily Schillinger, the group’s head of communications. “By partnering with private-equity firms, doctors have more time to focus on caring for patients and benefit from experienced management teams, better technology and stronger networks.”
- “Despite attempts to use private equity as a scapegoat for serious challenges within the U.S. healthcare system, the truth is this: Where private equity is involved, physicians and patients alike are able to reap the benefits,” the AIC wrote.”
Additionally, the AIC also reiterated that private equity plays a critical, but limited rolein health care:
- “Countering claims that private equity has taken over much of the healthcare sector, the Washington-based group said that its industry has a relatively limited role in the medical system, with just 4.5% of physicians working in a private-equity-owned practice, based on 2022 data from the American Medical Association.”
Copied below is the full story.
Efforts to Spotlight Private Equity’s Healthcare Stakes Struggle for Traction
The Wall Street Journal
By Chris Cumming
August 7th, 2023
Democratic lawmakers seeking more information about private equity’s role in the healthcare sector have made little progress, as several bills have stalled in the face of opposition from Republicans and industry groups.
Some medical companies would be required to disclose ownership by private-equity and other financial firms under proposals advanced this year by Democratic lawmakers and regulators, who cited concerns about how private-equity investment in the medical sector affects patients and workers.
But Republicans have resisted, with GOP lawmakers in the House of Representatives recently excluding a provision from the proposed Healthcare Price Transparency Act that would have forced healthcare companies to make public such ownership.
“It is impossible to talk about transparency in the healthcare industry without talking about private equity, which isn’t addressed in this legislation,” Rep. Richard Neal (D., Mass.) said at the bill markup session, where changes to proposed laws are discussed, on July 26. “Patients have no indication of how PE ownership affects their care, nor can regulators conduct proper oversight.”
The Democrat-supported ownership-disclosure provision contained in an earlier draft of the price measure got stripped out as a part of a number of changes made by Republicans on the Ways and Means Committee, say congressional staffers and others involved in the process. Republican House leaders are expected to integrate a version of the bill, which calls for more disclosure on medical charges and pricing to patients, into a larger healthcare measure that they intend to present to the full chamber for a floor vote later this year, the people say.
Rep. Bill Pascrell (D., N.J.) proposed an amendment to restore the private-equity disclosure provision, calling the industry a “vicious monster [taking] over our entire healthcare system.” His proposal was rejected in the markup session on a party-line vote.
The session revealed lawmakers’ disagreements about whether private-equity firms are responsible for the healthcare system’s challenges. Republicans attributed high healthcare prices to government regulations and lack of competition, rather than predatory behavior by investment firms. Democrats say profit-seeking private-equity firms lead to poorer quality of care, higher prices and more limited access.
Rep. David Schweikert (R., Ariz.) said the government has created too many rules and regulations that limit competition, driving up healthcare prices. “Competition is what bends the cost curve and takes away the desire of private equity to chase excess profits,” Schweikert said.
Other lawmakers have questioned the disclosure push on the grounds that much private-equity ownership information in the healthcare sector is already public. The Health and Human Services Department and Medicare administrators already have the power to ask for ownership information, and under the Biden administration have been publicizing more data. For instance, in April the HHS released ownership information for more than 17,000 hospice-care providers and home-health agencies.
Nevertheless, Democrats have intensified efforts to mandate disclosure of private-equity ownership in the medical system. None of the numerous proposals made this year at both the federal and state level have passed.
These efforts remain in relatively early stages, and to move forward they must overcome fundamental disagreements between Republicans and Democrats about private equity’s role in the health system, said Jane Lucas, a partner in healthcare legislative and public policy at law firm Alston & Bird.
“In part, the parties are talking past each other. And they disagree on the premise that private equity is responsible for rising healthcare costs,” Lucas said.
In March, Congressional Progressive Caucus Chair Pramila Jayapal (D., Wash.) introduced the Healthcare Ownership Transparency Act in the House, a measure that would require companies that receive Medicare or Medicaid payments to disclose private-equity ownership. The proposal hasn’t come up for a vote in the chamber, a Jayapal aide said.
In recent moves at the state level, a group of Democrats in the Pennsylvania Senate in May introduced a package of bills that would, among other changes, require medical facilities to inform the state attorney general about mergers or significant financial changes. This proposal—created in response to hospital closures by private-equity-backed Prospect Medical—would inform the state about hospital takeovers by private-equity firms, said an aide for state Sen. Tim Kearney, one of the measure’s Democratic sponsors.
However, the same lawmakers rolled out a similar set of bills in Harrisburg last summer only to see the initiative die without a vote in the Republican-controlled chamber. Now the reintroduced bills have gone to a committee, and the sponsors expect to discuss them with their colleagues across the aisle, the aide said.
At the federal regulatory level, the HHS in February proposed a rule that would require nursing homes to disclose ownership by private-equity firms and other investors. The rule, part of the Biden administration’s push to improve nursing-home care, hasn’t been finalized.
The private-equity industry has pushed back against such disclosure efforts while also rebutting claims that industry investments contribute to degradation of medical care. On July 27—the day after the House Ways and Means markup session—the American Investment Council, a private-equity lobbying group, released a report arguing that investment firms create competition and help expand access to care.
“Despite attempts to use private equity as a scapegoat for serious challenges within the U.S. healthcare system, the truth is this: Where private equity is involved, physicians and patients alike are able to reap the benefits,” the AIC wrote.
Countering claims that private equity has taken over much of the healthcare sector, the Washington-based group said that its industry has a relatively limited role in the medical system, with just 4.5% of physicians working in a private-equity-owned practice, based on 2022 data from the American Medical Association.
Public records show that this year, the AIC has lobbied on several House proposals that would require disclosure of private-equity ownership in the health sector. A spokeswoman for the group said it seeks to communicate to lawmakers the positive role private-equity plays in healthcare.
“Private-equity investments are improving the healthcare system, and we are working to make sure members of Congress understand the importance of this investment in their own local communities,” said Emily Schillinger, the group’s head of communications. “By partnering with private-equity firms, doctors have more time to focus on caring for patients and benefit from experienced management teams, better technology and stronger networks.”
Advocates for more transparency say it is needed to understand private equity’s role in medicine and create public policy to address the issue. Eileen O’Grady, director of healthcare for the Private Equity Stakeholder Project, a nonprofit group that advocates for tighter rules for private equity, said the existing public information on healthcare ownership is piecemeal, and that much remains unknown about private equity’s role.
“Disclosing ownership by a private-equity firm should not be so burdensome or controversial,” O’Grady said. “The fact that private-equity firms and their lobbyists are fighting baseline transparency efforts so hard does make it look like they have something to hide.”
