AIC Submits Letter to Senate HELP Committee Highlighting Private Equity’s Critical Role in Supporting U.S. Health Care
WASHINGTON, DC – Today, the American Investment Council (AIC) submitted a letter ahead of the Senate Committee on Health, Education, Labor and Pensions’ (HELP) hearing on Steward Health Care highlighting private equity’s limited but crucial role in supporting America’s health care system.
Private equity investments have supported research into deadly diseases like Alzheimer’s and Parkinson’s, expanded and renovated facilities in rural America, modernized medical records and health care data, and made other critically important investments.
“America’s health care system faces many challenges – but private equity is not the cause,” wrote AIC President and CEO Drew Maloney. “Although private equity is not large enough to influence any sector, its investment dollars are critical to American innovation and growth – especially for small businesses on main streets across the country. American companies, in health care and other economic sectors, need more investment from all sources. Private equity and private credit can provide the needed capital. We welcome the opportunity to work with the committee and discuss productive ways to ensure that health care companies, patients and workers can benefit from productive private equity investments nationwide.”
Click here to read the full letter.
Copied below are key excerpts from the letter.
Private Equity’s Role in Health Care
- “Private equity has invested nearly $1 trillion into U.S. health care since 2006. This may sound like a large amount, but the U.S. spent nearly $3 trillion on health care in 2006 alone. Health spending has increased yearly to more than $4.3 trillion in 2021. Critics also claim that private equity has consolidated hospitals and physician practices. However, even critics of private equity acknowledge that private equity invests in just 8% of all private hospitals in the United States. A new report from Pitchbook found that private equity owns less than 4% of providers by revenue, and those investments are declining.”
Helping Rural Patients Access Critical Medical Care
- “Private equity brings innovative solutions and provides critical access to health care in rural and underserved communities. Private equity has invested $15 billion in more than 250 urgent care clinics as of 2020. These investments in urgent care centers help get rural patients the care they need over shorter distances while also not overwhelming the limited number of hospitals in these areas. Physician retirements are often a key reason clinics shut down, stifling their ability to employ support staff and treat longstanding patients. However, with private equity investment, many clinics do not close and are sometimes folded into larger, private equity-backed practices that can expand access to different regions while simultaneously improving efficiencies and reducing operating costs.”
- “Thanks to private equity investment, MedExpress was able to open new urgent care locations in rural Appalachia, where hospital closures had become more common. According to a study from West Virginia University, new MedExpress clinics were “associated with fewer short-term admissions to hospitals, fewer inpatient days, fewer emergency room visits, and a reduction in outpatient visits at hospitals.”
Financing Life-Saving and Low-Cost Treatments for Patients
- “Private equity helps finance drug manufacturers, especially over-the-counter and generic drug makers, that provide low-cost options to patients. Private equity firms also help pharmaceutical companies expand and become more efficient, introducing new technologies and resources that lead to better innovations at a timely rate.”
- “Over the past ten years, private equity has invested more than $123 billion in pharmaceutical manufacturers. These investments have enabled the development of treatments for several life-threatening conditions, such as Leukemia, Alzheimer’s, Parkinson’s, heart disease, HIV, and breast cancer, and for several debilitating conditions, including rheumatoid arthritis, diabetes, and ulcerative colitis.”
- “Anthos Therapeutics launched in 2019 thanks to private equity investments with the express goal of creating new therapies for patients suffering from high-risk cardiovascular issues. Anthos recently announced that they had developed a new drug that could significantly reduce the risk of blood clots, providing a safer alternative for the 12.1 million Americans expected to suffer from atrial fibrillation by 2030.”
Funding Innovative Medical Devices that Improve Patients’ Quality of Life
- “Private equity investment also helps fund critical medical research and technological developments. Over the past decade, more than 870 medical manufacturers partnered with private equity firms to grow their footprints, innovate new products, hire industry experts, and ultimately distribute the resulting medical devices to providers and patients in need of this type of care.”
Giving Doctors and Nurses the Resources to Treat Patients
- “Researchers at Duke University show that private equity investment at short-term acute care hospitals increased the probability of hospitals providing a wider range of services. The same study also found that private equity-backed hospitals saw greater declines in both in-hospital mortality and 30-day mortality among heart attack patients compared to non-private equity-backed hospitals. A 2021 study from researchers at the McDonough School of Business and the Indiana School of Business shows private equity-backed hospitals have ‘better survival prospects and operating profitability.’”
Empowering Workers and Supporting Well-Paying Jobs
- “Outside of the health care sector, private equity is supporting workers through well-paying jobs and increased ownership stakes in the businesses they work. Multiple AIC members have partnered with Ownership Works, a nonprofit initiative that builds employee wealth by expanding shared employee ownership of companies, enabling employees to directly benefit from the company’s success . Since its founding in 2021, Ownership Works has impacted nearly 112,000 employees nationwide, generating over $130 million in payouts to low- and moderate-income workers.”
