PE in Healthcare – Recent Governmental Commentary Could Indicate Policy Changes on the Horizon and Time for Increased Vigilance

Recent reports published by the Senate Budget Committee (the “Committee”) and the U.S. Department of Health and Human Services (“HHS”) highlight what the authors characterize as concerns related to private equity (“PE”) ownership of providers and involvement in the health care industry. On January 7, 2025, the Senate Budget Committee released a bipartisan staff report, titled “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System” (the “Senate Budget Committee Report”).¹ Shortly thereafter, on January 15, 2025, HHS released a report summarizing comments it received in response to its March 2024 Consolidation in Health Care Markets Request for Information (“RFI”) (the “HHS Report”) (collectively referred to as, the “Reports”).²

The Senate Budget Committee Report focused more narrowly on two case studies involving PE-owned hospitals and the HHS Report looked at increased PE backing in the health care industry more broadly. A few common concerns identified by the authors of both Reports include reductions in quality of care and patient safety, decreased access to care and facility closures, higher prices for consumers, understaffing, difficulties with transitions and integration post-close, and a lack of transparency with ownership structures and PE-led transactions as a whole. Links to the full reports are included in the footnotes below.

Commentary related to PE involvement in health care is not new. Additionally, we have heard these concerns before, which are typically driven by relatively extreme situations that result from many different factors. In our experience, however, there are many ways in which PE investment in health care can benefit all stakeholders, including patients and providers, as well as drive advancements, efficiencies, and compliance in the industry. Nevertheless, the increased focus and issues identified during the investigations led the Committee and HHS to suggest additional oversight of PE involvement.

For example, some considerations already discussed in the HHS Report include:

1. Building on CMS’ nursing home ownership transparency rule to apply similar requirements and guidelines to other provider-types to enhance ownership transparency.
2. Updating current requirements related to disclosures of mergers and acquisitions of health care entities by lowering reporting thresholds, requiring review and approval, and providing those responsible for reviewing such transactions with additional data and resources.
3. Implementing additional enforcement actions to halt hospital mergers and industry rollups.
4. Improving data sharing and collaboration across governmental bodies and agencies, including state and local authorities, to promote competition.

For PE firms invested in, or contemplating an investment in health care, now is the time to stay vigilant and ensure compliance. As such, we recommend the following:   

• Monitor federal and state regulatory updates;
• Consider reaching out to your lobbyists and representatives to share positive commentary and impacts that PE firms have on the industry such as examples of increased efficiencies and innovative technologies and delivery models;
• Prepare contingency models that can be responsive to policy or regulatory changes;
• Document and routinely review clinical quality trends to ensure high quality care;
• Consider offering providers and patients opportunities to provide feedback to encourage smooth transitions; and
• Implement strong compliance programs that include routine compliance audits and assessments.

At this time, it is unclear what to expect under the new Trump administration and whether the administration will address additional safeguards and oversight in this area. Quarles will continue to monitor policy and regulatory decisions that impact healthcare entities moving forward.  

If you have questions regarding the Reports or how to prepare for the policy changes related to the same, please reach out to your Quarles attorney or:

• Amy Cotton Peterson: 602-229-5530 / amy.cottonpeterson@quarles.com
• Bailey Walden: 602-229-5432 / bailey.walden@quarles.com
• Jon Howard: 602-230-4628 / jon.howard@quarles.com

Please visit our Federal Policy Watch: Monitoring White House Developments page for more insight about navigating changes at the federal level.

END NOTES

¹ Senate Budget Committee Bipartisan Staff Report, Profits over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System, available here. 

² U.S. Department of Health and Human Services, HHS Consolidation in Health Care Markets RFI Response, available here.