Private Equity, Corporate Greed, and the “Financialization” of Healthcare

“Oh, please. Healthcare is no different than any other investment. You cut costs, you increase revenue, you generate revenue.” – Bartholomew Banks, private equity

Dr. Glaucomflecken is an alter-ego persona, with over two million and growing followers on TikTok, played by Dr. Will Flanary, a board certified ophthalmologist. 

In September 2023, Flanary released a short video series, “30 Days of US Healthcare”, exposing the many inner workings of the American healthcare system from his perspective as a physician. Wittily, he covered topics like insurance claim denials, pre-authorization and peer-to-peer requirements, rural medicine, surprise billing, and more.

One of the videos in his series was on private equity. Flanary acts out an imagined conversation between an emergency room physician and a personified profiteer, responsible for acquiring a third of all emergency room physicians in the United States. In a short 2 minute and 37 second clip, through role-playing, Flanary explains how private equity acquisitions are leading to worse health outcomes. It’s no surprise that private equity is in healthcare, as it’s infiltrating nearly every sector, but its possible devastating effects on patient outcomes, and even mortality, is deeply concerning.

In a more recent TikTok video, linked below, he uplifts recent research revealing that central line infections and fall rates have all increased significantly in private equity acquired hospital systems compared to non-private equity hospitals. These early data suggest acquisitions do affect patient outcomes.

The research to back up Flanary’s TikToks is growing. He cited a study recently published in JAMA by Sneha Kannan et al who found that, “After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals. This increase in hospital-acquired conditions was driven by a 27.3% increase in falls and a 37.7% increase in central line–associated bloodstream infections at private equity hospitals, despite placing 16.2% fewer central lines.”

We recently attended Families USA’s 2024 Health Action Conference, where two sessions focused on the topic of corporate greed in the healthcare system. The first, a closing plenary on day one, featured Dr. Don Berwick, Rx Trustee and President Emeritus and Senior Fellow of the Institute for Healthcare Improvement. In his remarks, Berwick shared that profiteering “is a driver in the potential destruction of our healthcare system as we know it”. When financial decision-making dominates the thoughts and practices of healthcare executives, he said, windfall profits go to stockholders while patients’ health and well-being is undermined.

In a keynote address he gave at the Institute for Healthcare Improvement National Forum in 2023, linked above, Berwick shared a powerful and personal account of navigating the healthcare system as his beloved wife underwent open heart surgery. Importantly, his tale highlighted the many incredible humans behind healthcare – providers, technicians, and hospital workers – who make the miracles, like the full recovery his wife experienced, possible. He fondly recalled many people who lightened a deeply harrowing few weeks. By doing so, he also made a sharp and moving distinction between the systemic failures of a healthcare system operating for profit – that shakes down patients for payments, issues surprise bills for care, raises prices on cancer drugs, or has a governing board of directors with very few to no medical professionals – and the many good healthcare workers who operate within it.

The “Cure”: Challenging the Status Quo and Centering Communities

Where do we go from here, and how can we change a system that is routinely putting profit over people? In their article in Health Affairs, Emily Stewart, Executive Director of Community Catalyst, and Jim Baker, Executive Director of the Private Equity Stakeholder Project, outline steps for “a better path forward” as it relates to private equity in healthcare:

  1. Congress could create joint liability for private equity firms and their portfolio companies[…], to share in the responsibility of debt and other liabilities accrued under their leadership.
  2. The Federal Trade Commission (FTC) could more aggressively evaluate mergers and acquisitions involving private equity […], and do more to look into the anti-competitive practices of many of these private equity firms.
  3. Other federal agencies, such as the Department of Health and Human Services and its Centers for Medicare and Medicaid Services, could do far more to promote transparency about private equity-owned health systems and the impact of that ownership. For example, from CMS star ratings to other assessments of quality and access, the federal government could be providing on a regular basis information on where private equity is involved in health care and cross-reference that involvement to quality.
  4. Lastly, Congress should close tax loopholes, such as the carried interest loophole, that make it easier for private equity to make money off of cutting care at hospitals. By allowing management feeds to be taxed as capital gains, the carried interest loophole in particular allows private equity firms to pay taxes at half the rate workers in the health systems they manage pay.

At the Health Action Conference, Berwick reminded attendees that, “Health is not made in hospitals. It’s made in communities”. In addition to the much needed pushback on profiteering, he advocated for moving more resources to where people live, work, pray, and play. In other words, in all the places where health is made – the social drivers of health. 

There are several organizations in our network working directly on greed, profiteering, and the “financialization” of our healthcare system, including People’s Action Institute. Their Care Over Cost campaign is fighting back against insurers’ medical claims denials, and winning people the care they need from Maine to Colorado; all the while, building the power of poor and working people across urban, rural, and suburban communities to win change through issue fights and elections. Taking a dual-approach, People’s Action is not only directly taking on health insurers and holding them to account but they are also building power among people to advocate for long-term change in their communities and address the social drivers.

We can no longer accept that:

  • When an insured cancer patient shows up for chemo, she is told she owes $14,000 before the facility can administer her life-saving medication (Source: Your Money or Your Life).
  • A woman is denied pain medication after open-heart surgery (Source: Care Over Cost).
  • An immigrant is turned away from receiving life-saving cancer care treatment because they are “uninsurable” and cannot afford to pay a treatment center in full and ahead of time (Source: El Centro’s Ni Uno Mas).

If corporate greed and profiteering are a “metastasizing” disease, as Stewart and Baker write, or if it threatens healthcare as we know it, as Berwick suggests, advocates and organizers across the country are working on a cure that centers communities and challenges the status quo of the current system. They envision a system that incentivizes people over profit. Organizations taking on greed, profiteering, and “financialization” in health care head on include:

The Center for Health Progress

is organizing healthcare workers, who are fed up with profit over people, against our corporate healthcare system. Bringing together immigrant rights, health advocacy, and direct service organizations around a long-term vision of a health care system that works for all, their Health Care System Redesign work launches local and statewide campaigns in Colorado to reduce the structural barriers that contribute to unjust health outcomes, and to build a political will necessary to achieve true health equity.

Community Catalyst

is working on Hospital & Health Systems Accountability, partnering with a range of organizations unified in their efforts to hold hospitals accountable to their communities, and shape practices and policies so that hospitals and health systems can better support the communities they serve. This includes their Community Benefit and Economic Stability Project – developing community-driven financial assistance practices, billing, and collection policies – as well as their Hospital Equity and Accountability Project – addressing the negative impact of hospital and health industry consolidation on systemically excluded communities.

Families USA

is putting people first in healthcare by tackling drug affordability, surprise medical bills, “junk insurance” plans, industry consolidation, and more. Their new People First Care initiative is transforming health care payment and delivery so that the system focuses on getting and keeping people healthy.

If the stories in “Dr. Glaucomflecken’s” or Flanary’s parody videos ring a little too true to your experience of the health care system as a patient or provider, reach out to the organizations named above to learn how you can add your voice to those calling for change.

Green Arrows

Connect With Us on Social Media

Follow-us on social media for the most up-to-date news, resources, and events from the Rx Foundation and its partners.