White House, senators take aim at 'corporate greed in healthcare'

Both the executive branch and key bipartisan legislators announced plans Thursday to tackle the negative impacts of corporate interests and ownership in healthcare. 

The former consists of sweeping efforts quarterbacked by the White House and conducted by federal agencies and regulators focused on anticompetitive behaviors, transparency and drug pricing. Among the highlights: a joint Request for Information from the Department of Justice (DOJ), the Federal Trade Commission (FTC) and the Department of Health and Human Services (HHS).

"The Biden-Harris Administration believes that the healthcare system should serve patients, not corporate profiteers," the White House wrote in a fact sheet. "The Administration is concerned that our healthcare system is increasingly being financialized, with corporate owners like private equity firms and others maximizing their profits at the expense of patients’ health and safety, while increasing costs for patients and taxpayers alike."

The latter comes by way of a Senate Budget Committee investigation into reports that private equity ownership of healthcare providers has contributed to deteriorating care. Announced this morning by Sens. Chuck Grassley, R-Iowa, and Sheldon Whitehouse, D-Rhode Island, the committee’s ranking member and chair, the effort includes letters requesting financial relationships and operating practices sent to private equity firms and the providers they own. 

“As private equity has moved into healthcare, we have become increasingly concerned about the associated negative outcomes for patients,” Whitehouse said in a release. “From facility closures to compromised care, it’s now a familiar story: private equity buys out a hospital, saddles it with debt, and then reduces operating costs by cutting services and staff—all while investors pocket millions. Before the dust settles, the private equity firm sells and leaves town, leaving communities to pick up the pieces."

White House homes in on anticompetitive practices

In the White House fact sheet and an accompanying joint release from regulatory agencies, the federal government said it will be launching a "cross-government public inquiry into corporate greed in healthcare." 

The effort is backboned by the agencies' joint Request for Information seeking input on "private equity and other corporations' increasing power and control of our healthcare," which the White House said will guide future regulation and enforcement. New leadership roles will be supporting the push—HHS will be appointing a "chief competition officer" while the DOJ's Antitrust Division and the FTC will tap "counsels for healthcare," they said.

Also in the trio's crosshairs are anticompetitive roll-ups in which private equity firms, payers, health systems and other businesses conduct a slew of smaller acquisitions to gain control of a market. These tactics can be harder for regulators to spot because the individual deals are often too small to trigger an antitrust review, the White House noted.

As signaled earlier this year when the FTC launched a legal challenge against a Texas-based anesthesia provider (U.S. Anesthesia Partners Inc.) and its parent private equity firm (Welsh, Carson, Anderson & Stowe), the roll-ups will become a greater focus for regulators going forward. To support this, HHS, DOJ and FTC said they will now "to the maximum extent possible, engage in data sharing to help the antitrust enforcers identify potentially anticompetitive transactions that might otherwise evade ready review by antitrust enforcers."

Meanwhile, HHS expanded on its work to provide ownership transparency with today's release of ownership data on federal qualified health centers and rural health clinics. The department, through the Centers of Medicare & Medicaid Services (CMS), had previously done so for hospitals, nursing homes, hospice providers and home health agencies. 

The transparency push will extend to Medicare Advantage as well. Per the White House, CMS will begin "soliciting information from the public early next year to strengthen CMS’ data capabilities and Medicare Advantage transparency efforts."

Finally, the White House committed to pursing controversial "march-in" authority under the Bayh-Dole Act that allows the federal government to license taxpayer-funded inventions—in this case, prescription drugs—to another party.

The administration today released, and is seeking public comment on, a framework for agencies specifying for the first time that price play a role in that decision. The move was reported on earlier this week and has already received strong pushback from the pharmaceutical industry. 

Bipartisan senators "ask tough questions" on private-equity-owned care

Just before the White House shared its plans, key Senate leaders from both sides of the aisle launched an investigation into changes in hospital care brought about by private equity ownership.

Sens. Grassley and Whitehouse said in a Thursday morning announcement that their inquiry centers on concerns that “many hospitals” taken over by private equity firms “have experienced significant staffing reductions and substandard healthcare, and have been stripped of valuable assets, including their real estate, leaving them saddled with debt.”

The senators have sent letters to private equity firms Leonard Green & Partners and Apollo Global Management, as well as Medical Properties Trust, a real estate investment trust focused on healthcare facilities that is involved with private equity firms.

Investigation letters were also sent to health systems Prospect Medical Holdings (owned by LG&P) and Lifepoint Health (owned by Apollo), which operate hospitals in multiple states including California, Pennsylvania, Iowa and Rhode Island.

The inquiries, dated Dec. 6, include questions and documentation requests related to financial relationships between the entities, whether any private equity companies impacted provider organization’s authority to set operating practices such as billing or staffing ratios, any private equity companies’ investments toward improving care delivery at owned facilities and the reasoning behind any firm’s decisions to divest their ownership interest, among other focal points.

A spotlight in the inquiries is Ottumwa Regional Health Center, a former nonprofit hospital that’s part of Lifepoint Health and located in Grassley’s home state of Iowa. The senator had already launched a probe into the hospital earlier this year after an incident where a nurse practitioner assaulted nine sedated female patients and later fatally overdosed on hospital premises.

Ottumwa Regional’s ownership “failed to provide full and complete responses” to Grassley’s inquiries, which included questions on the center’s financial stability and whether transactions related to its ownership interests may have contributed, according to Thursday’s announcement. That failure has prompted additional oversight, the lawmakers said.

“When it comes to our nation’s hospitals, a business model that prioritizes profits over patient care and safety is unacceptable,” Grassley said in a statement. “The shocking events at Ottumwa Regional Health Center prompted me to ask tough questions about how financial maneuvers by private equity and related companies have negatively impacted the resources, and thereby the patient care, at our rural hospitals. Iowa residents, including those living in rural areas, shouldn’t have to settle for anything less than the highest quality of care.

“I look forward to working with Senator Whitehouse to get answers and ensure that our nation’s hospitals provide high-quality healthcare to the communities and patients they serve.”

The senators said their scrutiny is supported by media reports and cases like Ottumwa Regional as well as academic research into private equity’s ownership of healthcare providers. In regard to the latter, a systematic literature review of 55 empirical studies published this July in the BMJ highlighted frequent higher costs and reduced quality, “warranting surveillance, reporting and possibly increased regulation.”

Critics have pointed fingers at private equity ownership for a range of specific issues affecting the industry, including contract labor price gouging, aggressive patient billing, reduced access, increased spending, reduced quality and dangerous consolidation.

Defenders of private equity have countered that these firms are vital to the healthcare industry for their role in increasing a healthcare organization’s scale and, subsequently, its bargaining power against other major players, such as large payers.