Private Equity Buyouts in Healthcare: Who Wins, Who Loses?

Eileen Appelbaum () and Rosemary Batt ()
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Eileen Appelbaum: Center for Economic and Policy Research
Rosemary Batt: Cornell University

No 118, Working Papers Series from Institute for New Economic Thinking

Abstract: Private equity firms have become major players in the healthcare industry. How has this happened and what are the results? What is private equity’s ‘value proposition’ to the industry and to the American people -- at a time when healthcare is under constant pressure to cut costs and prices? How can PE firms use their classic leveraged buyout model to ‘save healthcare’ while delivering ‘outsized returns’ to investors? In this paper, we bring together a wide range of sources and empirical evidence to answer these questions. Given the complexity of the sector, we focus on four segments where private equity firms have been particularly active: hospitals, outpatient care (urgent care and ambulatory surgery centers), physician staffing and emergency room services (surprise medical billing), and revenue cycle management (medical debt collecting). In each of these segments, private equity has taken the lead in consolidating small providers, loading them with debt, and rolling them up into large powerhouses with substantial market power before exiting with handsome returns.

Keywords: European Private Equity; Leveraged Buyouts; health care industry; financial engineering; surprise medical billing revenue cycle management; urgent care; ambulatory care. (search for similar items in EconPapers)
JEL-codes: G23 G34 I11 (search for similar items in EconPapers)
Pages: 115 pages
Date: 2020-03
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:118

DOI: 10.36687/inetwp118

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