WASHINGTON, D.C. — The Department of Health and Human Services (HHS) has released a detailed report addressing the growing concerns surrounding consolidation in health care markets and the increasing influence of private equity (PE) and other private investors. This report, developed in response to a Request for Information (RFI), sheds light on how these trends are shaping the health care landscape, driving up costs, and adversely affecting both patients and workers.
The report comes amid a collaborative effort between HHS, the Federal Trade Commission (FTC), and the Department of Justice (DOJ) to promote competition in the health care sector. This tri-agency initiative, announced in December 2023, aims to tackle long-standing issues of health care market concentration, which have led to elevated costs and reduced access to quality care for Americans. The RFI, issued in March 2024, sought to gather public insight on health system transactions, insurer practices, and PE-backed health care investments. These contributions have now been synthesized into the report, providing a foundation for future policy and regulatory action.
Key Findings
The report identifies two dominant trends in the health care sector that have raised alarm among stakeholders:
- Increasing consolidation of health care markets, particularly through mergers and acquisitions among providers and insurers.
- A surge in private equity activity shaping health care services, often prioritizing financial returns over patient care and operational integrity.
Responses to the RFI, totaling over 2,000 submissions from patients, physicians, labor unions, health systems, insurers, and academic researchers, highlighted a number of recurring themes. These include concerns over higher costs, reduced access, and declining quality of care linked to market concentration and PE involvement.
Key Themes From the Report
- Provider Consolidation and Patient Impact
Consolidation among health care providers has been shown to drive up prices while diminishing accessibility for patients. The reduction in competition has left many communities with fewer affordable options for care. - Private Equity Transactions and Quality of Service
Mergers and acquisitions in PE-backed health care settings were flagged for leading to operational changes and reductions in quality. Case studies cited in the report document examples of PE firms saddling hospitals with debt, liquidating assets, and ultimately causing closures, staffing shortages, and jeopardized patient safety. - Mixed Reviews from Physicians
Health care professionals reported varying experiences with private equity involvement. While some cited improved efficiency and resources, others raised concerns over pressures to prioritize profitability at the expense of patient care. - Calls for Greater Transparency
Across responses, a broad consensus emerged for greater transparency in PE-led transactions and health care ownership structures. Stakeholders expressed frustration over the lack of accessible data on private equity’s activities in the sector. - Dissatisfaction with Private Insurers
Private health insurers, particularly vertically integrated ones, received significant criticism for actions perceived as prioritizing corporate interests over patient outcomes.
Policy Considerations
The report outlines potential policy responses aimed at addressing these issues and fostering a more competitive health care landscape. Among the recommendations are:
- Enhanced Ownership Transparency
Building on existing regulations, such as the Centers for Medicare & Medicaid Services’ rule on nursing home ownership transparency, to provide greater visibility into health care ownership structures. - Stronger Oversight of Mergers and Acquisitions
Lowering reporting thresholds for mergers and acquisitions, mandating pre-transaction review and approval, and equipping regulators with more resources to monitor and evaluate these deals. - Aggressive Enforcement Actions
Pursuing stricter enforcement to prevent harmful hospital mergers and rollups that could exacerbate health care inflation and reduce service quality. - Improved Coordination Among Authorities
Strengthening collaboration between federal, state, and local entities to implement comprehensive strategies that promote competition and lower costs.
The Path Forward
The HHS report underscores the urgent need to address the harms caused by health care market consolidation and unchecked private equity influence. With health care costs continuing to outpace wage growth, patients, providers, and policymakers alike are calling for meaningful reforms to alleviate the burden on families and ensure equitable access to care.
The tri-agency collaboration between HHS, DOJ, and FTC aimed to identify and address anti-competitive behavior in the health care industry is a promising step towards achieving these goals.
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