Private equity takeovers of health services around the world are associated with poorer quality of care and higher costs, according to the largest study of its kind.
Over the past decade, private equity firms have increasingly invested in, acquired, and consolidated healthcare facilities. Globally, healthcare purchases are over £157bn from 2021 alone.
Despite much speculation, evidence of the impact of this rapidly growing global trend is lacking.
It now provides a systematic review of private equity takeovers of healthcare services across eight countries including the US, the UK, Sweden and the Netherlands. Private equity (PE) ownership of healthcare services including hospitals and nursing homes has been associated with a detrimental impact on the cost and quality of care, suggests the review published in the BMJ medical journal.
The authors of the review, which was led by the University of Chicago, said: “The clearest evidence points to the fact that PE is associated with increased health care costs. Evidence across studies also suggests that PE ownership has mixed effects on healthcare quality, with increasing evidence that PE ownership may degrade quality in some capacity rather than improve it.”
No consistent beneficial effects of private equity ownership were identified, the researchers said. “The current body of evidence is strong enough to confirm that PE ownership is a consequential and increasingly prominent feature in health care, warranting increased surveillance, reporting and possibly regulation,” they wrote.
The researchers identified 1,778 studies, of which 55 met the inclusion criteria. They looked at the impact of private equity takeovers on costs, quality of care and health outcomes.
Nine of 12 studies showed that services owned by these firms had higher costs to patients or health care funders, three found no differences, and none showed lower costs.
Private equity ownership has also been associated with a mixed and detrimental effect on health care. Of the 27 studies that assessed quality of care, 12 found adverse effects, three found beneficial, nine were considered positive – some measures decreased, some improved – and three were neutral.
Health outcomes showed both beneficial and adverse outcomes, but the number of studies for this measure was too low to draw any definitive conclusions.
Cat Hobbs, director of public ownership campaign group We Own It, said: “This important study is no surprise. When vital services are privatized, patients get the worst of both worlds: higher costs for lower quality care.
“Private equity firms will always prioritize making a financial return – that’s their job. But these incentives are in direct conflict with the public interest. Healthcare is not just another investment opportunity. It is a vital public service that we all need at some point in our lives.”
She said: “Private equity ownership is increasing rapidly in the healthcare sector, and the public needs to be aware of the risks to care quality and access.”
David Rowland, director of the Center for Health and Public Welfare, a think tank, said regulators and politicians need to “get a target” on how private equity takeovers affect health care.
He said: “It’s a matter of regulators and politicians, for example, not paying attention to the huge return these private equity funds need for providing care for a child with learning difficulties. But this research shows that profit pressure from these services can put patients and vulnerable people at risk.”
Dr Tony O’Sullivan, co-chairman of the campaign group Keep Our NHS Public, said the review produced a “shocking piece of evidence”. Policymakers must prioritize public funding and health care provision if they are to avoid “detrimental” consequences for patients, he said.