PHILADELPHIA, PA — A recent report by the Private Equity Stakeholder Project (PESP) has shed light on the significant footprint of private equity in Philadelphia’s healthcare sector. The study identifies nearly 900 private equity-owned healthcare locations across the Greater Philadelphia area, raising concerns about the implications for patient care and the healthcare system.
Private equity’s involvement in healthcare poses risks such as increased costs, reduced quality of care, and potential disruption of essential services. The report highlights that Philadelphia, with its extensive private equity presence, is particularly vulnerable to these adverse effects.
Michael Fenne, senior healthcare researcher at PESP, commented on the study’s findings, stating, “The goal in preparing this data was to begin to measure private equity’s involvement in a city that already knows its risks.”
Key Findings and Subsector Impacts
The report outlines three subsectors where private equity has made significant investments:
- Physical Therapy: With 271 locations managed by six companies, physical therapy represents the largest share of private equity ownership. This trend indicates a regional consolidation, with each firm averaging 45 clinics. The focus on high-margin, outpatient services underscores private equity’s interest in quick returns.
- Behavioral Health: There are 98 behavioral health locations under private equity control, spread across 12 companies. Given the increasing demand for mental health services, private equity’s involvement raises concerns about whether the pursuit of profit might compromise access to quality care.
- Dental Care: The report identifies 86 dental care locations owned by six companies, averaging about 14 clinics each. This ownership could lead to higher prices for routine services and reduced emphasis on personalized care as operations are streamlined for profit.
Broader Concerns for Philadelphia’s Healthcare
The report highlights several risks associated with private equity ownership in healthcare:
- Patient Risks: Research indicates private equity-owned hospitals have higher rates of adverse events and mortality rates in nursing homes compared to non-private equity facilities.
- Rising Costs and Debt: The study suggests that private equity investments can drive up healthcare costs and introduce financial burdens like medical credit cards, which can trap patients in debt.
- Bankruptcy Issues: In 2024, nine private equity-owned healthcare companies have filed for bankruptcy, accounting for 23% of all large U.S. healthcare bankruptcies this year. The aggressive use of debt by private equity firms makes their portfolio companies vulnerable to economic shifts.
Fenne further stated, “Our data show that most people in the region don’t have to drive too far to find the nearest private equity-owned healthcare provider.”
The report aims to inform healthcare consumers and patients about the growing influence of private equity in the local market. With investments extending to various corners of the Philadelphia region, private equity’s reach includes a wide array of clinic and provider types, emphasizing the need for awareness and understanding of its impact on healthcare delivery.
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