Harvard and UT Austin Officials Outline How “Private Equity Is Not The Problem In Health Care, It’s Just The Scapegoat For Misaligned Incentives”
“With nearly 2 out of every 10 dollars in the U.S. economy spent on health, we must get to the root cause of why the current system is failing. While its expedient to blame private equity, it fails to address the underlying flaws in the current health care incentive structure.”
Washington, D.C. – Last week, Becker’s Hospital Review published a joint op-ed from David N. Bernstein, MD, PhD, MBA, MEI, and Prakash Jayakumar, MD, PhD, explaining why private equity is not to blame for health care delivery today; but rather, flawed incentive structures that deprioritize patient health and well-being are a root cause.
Dr. Bernstein is a resident physician in the Harvard Combined Orthopaedic Residency Program at Massachusetts General Hospital and Dr. Jayakumar is an Assistant Professor and Director of Value-Based Health Care and Outcome Measurement Innovations in the Department of Surgery and Perioperative Care at Dell Medical School at the University of Texas at Austin.
Please see below for key excerpts from the op-ed.
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Private Equity Is Not The Problem In Health Care, It’s Just The Scapegoat For Misaligned Incentives
By David N. Bernstein, MD, PhD, MBA, MEI and Prakash Jayakumar, MD, PhD | Thursday, May 2nd, 2024
“There is a perception that private equity may be hurting health care delivery today. But this is unlikely and blaming it for the woes we face is likely shortsighted. Private equity in health care – and the current outcomes of it outlined above – is a side effect, and if the underlying incentive structures are not changed, it will not matter whether private equity is allowed to invest in health care today or tomorrow. Indeed, even non-private equity-owned or operated hospitals and health systems are financially struggling today.
“If we truly shift towards a health care delivery system that rewards health and enhances value – or the outcomes most important to patients achieved for the dollars spent across a full care cycle – for patients, the issues of private equity involvement in health care will be minimized, if present at all. Physicians will be free to treat patients as they see fit as long as patient value remains optimized, and bureaucratic hurdles, including unnecessary paperwork, will likely be reduced. In such a scenario, helping people and making money – which are commonly thought or assumed to be mutually exclusive in health care – will be aligned for all parties involved. Thus, private equity will enhance health, as they work hard to optimize profit, which will – in turn – optimize patient health and well-being.
“With nearly 2 out of every 10 dollars in the U.S. economy spent on health, we must get to the root cause of why the current system is failing. While its expedient to blame private equity, it fails to address the underlying flaws in the current health care incentive structure. Through a collaboration of relevant stakeholders, including government, health systems, private equity (and other capital) firms, and patients, transforming our health care delivery system must be done to realign incentives around the main goal – to get people healthy and stay healthy.”
