ICYMI: At Hearing, Warren Rails Against Private Equity in Health Care for Increasing Prices and Lowering Quality, Calls for Ownership Transparency
Warren: “It is shameful that these (PE) firms can hide in the shadows while patients and workers suffer.”
Senator Warren’s Corporate Crimes Against Health Care Act would require health care entities receiving federal funding to publicly report mergers, acquisitions, changes in ownership and control, and financial data.
Washington, D.C. — At a hearing of the U.S. Senate Special Committee on Aging, U.S. Senator Elizabeth Warren (D-Mass.) questioned Dr. Christopher Whaley, Associate Director of the Center for Advancing Health Policy through Research and Associate Professor of Health Services, Policy and Practice at Brown University and Cora Opsahl, Health Fund Director for 32BJ Health Fund, on the need for ownership transparency in health care, particularly for entities owned by private equity firms, which raise costs and lower quality of care.
Dr. Whaley confirmed to Senator Warren that it is “virtually impossible” for patients to identify whether a neighborhood hospital or a primary care practice is owned by private equity due to lax ownership transparency laws that shield private equity firms from reporting ownership and other financial data to government regulators, researchers, and patients. Ms. Opshal confirmed the same is true for workers looking to identify whether a potential employer is owned by private equity.
When asked about solutions to increase ownership transparency, Dr. Whaley argued that “having accurate and transparent data on ownership is incredibly important and can help both state, federal regulators monitor health care markets.” On the impact of private equity on patient care, Dr. Whaley confirmed that prices increase and quality of care decreases following these acquisitions, especially for private equity-backed nursing homes.
Transcript: Health Care Transparency: Lowering Costs and Empowering Patients
U.S. Senate Special Committee on Aging
July 11, 2024
Senator Warren: Thank you, Mr. Chairman and Ranking Member Braun, for holding this hearing on price transparency.
For almost every other type of service, you can look up the price before deciding whether or not to purchase. But when it comes to health care, it is virtually impossible, even though Americans are paying more for health care than in any other country in the world.
So, when patients need health care, they should be able to easily find out the price of those services. Here's something else they should be able to find out easily: who owns the hospital or the physician practice that you or a loved one may visit to receive that care. Today, nearly 80% of doctors are employed by corporate entities, including private equity firms, and once in control, these firms raise their prices and cut corners to line their own pockets while the quality of care suffers.
So, let me start with you, Dr. Whaley. You are an expert on private equity and health care. If a patient wanted to find out whether a neighborhood hospital or a primary care practice was owned by private equity, how hard would that be to do?
Dr. Christopher Whaley, Associate Director of the Center for Advancing Health Policy through Research and Associate Professor of Health Services at Brown University: Senator Warren, I think it's virtually impossible for a patient to know whether or not their doctor's office is owned by a private equity company.
Senator Warren: Yeah, so virtually impossible. Because private equity firms don't have to report ownership, it is nearly impossible to find out if the doctor's office you visit is owned by one of these corporate vultures.
Well, let's ask about the workers. How hard is it for the workers to find out? Ms. Opsahl, you lead the health fund at labor union 32BJ. If one of your members wanted to find out if a potential employer of any kind was owned by a private equity company, how simple would that be to do?
Cora Opsahl, Health Fund Director, 32BJ Health Fund: Similar to what Dr. Whaley said, next to impossible. And I would even say, as the employer or as the sponsor of the plan, I don't know who I'm writing my self funded checks to as well.
Senator Warren: Okay, so next to impossible, virtually impossible.
I'm sensing a trend here. Patients can't find this information. Workers can't find this information. Even antitrust regulators have a hard time finding this information. These are the agencies that are responsible for cracking down on anti-competitive behavior, and they can't get their hands on these data.
And it matters, because private equity ownership has real consequences for the families and the workers who need help here.
So, Dr. Whaley, once private equity firms take over health care companies, what happens to health care cost and quality?
Dr. Whaley: Several studies have shown that when a private equity company acquires a health care practice, whether it be a physician or a hospital or other type of health care provider, prices increase quite substantially. We've also seen evidence, particularly in nursing homes, that quality goes down again quite substantially.
Senator Warren: So I just want to relate this to the earlier line of questions where you said people are using higher price as a signal that they're going to get better care, and yet the data show us that when private equity takes over, price goes up and quality of care actually goes down. Is that right, Dr. Whaley?
Dr. Whaley: That's what the host of studies that have examined that question have found.
Senator Warren: So not just one study. You see it across the board in all of the studies that have looked at this.
You know, I saw this firsthand in Massachusetts after private equity drove Steward Health Care into bankruptcy, and that is why I introduced the Corporate Crimes Against Health Care Act, which, among other things, would require private equity owned health care companies to publicly report mergers, acquisitions, changes in ownership and control and financial data, so at least the information would be out there.
Let me ask, Dr. Whaley, would these data help state and federal regulators prevent crises like the Steward failure in the future?
Dr. Whaley: I think having accurate and transparent data on ownership is incredibly important and can help both state, federal regulators monitor health care markets and get ahead of what's happening in many cases.
Senator Warren: It is shameful that these firms can hide in the shadows while patients and workers suffer.
My Corporate Crimes Against Health Care Act would shine a light on private equity's most parasitic practices. It would also claw back compensation from private equity executives that drive portfolio companies into bankruptcy. It would impose criminal penalties on executives when their failures result in patient deaths. And it would empower regulators to prevent crises like Steward from ever happening again.
There's a lot of work we need to do here, Mr. Chairman. Thank you.
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