[00:00:03] Welcome to Humans in Public Health. I'm Megan Hall

In the past few years, the field of public health has become more visible than ever before, but it's always played a crucial role in our daily lives. Each month, we talk to someone who makes this work possible. Today, Yashaswini Singh.

For this episode, we're taking a look at an industry you've probably been hearing about a lot these days…

*waterfall of news anchors saying “private equity” in various news clips*

[00:00:40] And if you live in New England, you've probably heard about, or maybe even been affected by the collapse of Steward, a health care system in Massachusetts that was purchased by a private equity firm and eventually filed for bankruptcy in 2024.

So to help us understand what's going on, and how private equity might be affecting your health care, we invited Yashaswini Singh into the studio. Yashaswini is a health care economist and professor at the Brown University School of Public Health. Her research looks at what happens when private equity firms buy all sorts of healthcare practices.

[00:01:14] Megan Hall: Yashaswini Singh, thank you so much for joining us today.

[00:01:16] Yashaswini Singh: Thank you so much for having me. I'm so excited to be here.

[00:01:19] Megan Hall: I think a lot of people have heard of private equity, but they don't really know what it means. So in the most basic terms, how would you explain what these private equity firms are?

[00:01:28] Yashaswini Singh: So private equity firms in general are investors who invest in private companies with profitability as their main emphasis.

Now, the key thing to remember with private equity is they typically are looking to exit their investments in a three to seven time year time period.

A short time horizon. So that's what makes them different from other types of financial investors.

[00:01:51] Megan Hall: In other words---The goal of private equity firms is to buy a company, make a few changes to it, and then after a few years, sell that company for more money than they bought it for.

[00:02:02] Yashaswini Singh: And recently they've been very attracted to the American health care system, investing in nursing homes, hospitals, physician practices—really every segment where care is delivered.

[00:02:12] Megan Hall:In the last 10 years, private equity firms have invested 1 trillion dollars into the US health care system.

[00:02:20] Yashaswini Singh:So in the early 2000s we saw a lot of private equity investments materialize in long-term care settings like nursing homes and assisted living facilities, and hospitals as well.More recently, since 2015 or so, we've seen the investment focus shift towards physician practices. And since the COVID-19 pandemic, the focus of investments has shifted to specialties where the care is focused more on value-based care and less on doing procedures. So settings like primary care or oncology.

[00:02:50] Megan Hall: Private equity firms are everywhere in the healthcare industry now. It's possible that a hospital you've been to, or a nursing home where your family member is living, is owned by a private equity firm. And again...their goal is to make enough changes that they can sell these places for a profit in just a few years.

[00:03:07] Megan Hall: So are private equity firms basically just really advanced house flippers?

[00:03:11] Yashaswini Singh: *laughs* I love that you use that analogy because the first time I started reading about private equity, I was watching an HGTV house flipping show, and I thought, ‘Oh my gosh, this is the perfect analogy.’ You know, you have investors who buy something that maybe quite hasn't realized its full potential—like a house flipper—and you make a whole bunch of renovations, maybe add a room, maybe put in some fancy glass panes, and then you flip it and you sell it for a profit. But the incentive is to sell it for a profit. You're not there just to make a home out of it: you're there to make a profit.

[00:03:44] Megan Hall: So extend the analogy for me. When a private equity firm buys a hospital, how is that like a house flipper? Are they adding a new roof to the hospital or what are they doing?

[00:03:54] Yashaswini Singh: So that's where it gets a little complicated.

[00:03:57] Megan Hall: Yashaswini says she's seen private equity firms use a few different approaches, depending on the situation. Let's say a PE firm buys a physician practice…

[00:04:07] Yashaswini Singh: So in physician practices, PE firms often deploy a consolidation strategy where they can roll up multiple smaller physician practices under the same parent entity. And this does a few things.

One, it enables the PE firm to capitalize on something economists call economies of scale, which essentially means, you know, a way of delivering maybe backend functions more efficiently. The billing, the administrative burden and so on.

The second thing it does is because you're consolidating smaller physician practices into one large entity, it can have a significant impact on the local level of market competition, which has direct and significant implications for the cost of care and access to care.

[00:04:51] Megan Hall: In other words, when these groups of doctors get bigger and bigger, they have more negotiating power with insurance companies, which means they can demand higher prices for the care they offer. The playbook for private equity firms that buy hospitals is a little different…

[00:05:05] Yashaswini Singh: Hospitals across different cities in the U.S. sit on really valuable real estate. Blocks and blocks of properties in downtown Philadelphia. The most valuable real estate in downtown Boston. That's more often where the hospital is sitting.

[00:05:19] Megan Hall: Private equity firms take advantage of this valuable resource by selling the property that the hospital sits on. Then, they make the hospital pay rent on the land they used to own.

[00:05:30] Yashaswini Singh: So these are also called real estate leasebacks because the property is then leased back to the hospital or the nursing home that once owned their own real estate, but now have the privilege of paying rent on it, because they're now owned by a private equity firm.

[00:05:44] Megan Hall: That sounds like a really bad deal for the hospital. Like why would they want that?

[00:05:48] Yashaswini Singh: You know, we're realizing now with the Steward episode that this is really not a great deal for hospitals because when you have hospitals losing their most valuable asset, the real estate that they're sitting on it creates a lot of financial pressures for the hospital to pay off the debt and service interest payments.

[00:06:06] Megan Hall: And that financial pressure starts to affect decisions at the hospital...

[00:06:11] Yashaswini Singh: Research has shown that after PE buyouts of hospitals staffing changes, there are reductions in how much hospitals spend on hiring and retaining talented staff. There's also research that shows that the services that hospitals offer, those also tend to change, kind of aligned with the expected profitability of those services. So things that are really lucrative, like imaging services, those go up. And at the same time, things that aren't traditionally considered to be money making, like inpatient psychiatry services, for example, those are paired down again in service of profitability for investors.

[00:06:47] Megan Hall: And whether a private equity firm buys a hospital or a physician group, it has a big effect on doctors.

[00:06:53] Yashaswini Singh: Yeah, so I've done a ton of work that shows when PE firms invest in health care practices, the way that physicians practice medicine changes. So we've seen physicians increase how many patients they see. They're made to see more patients per day. They're also made to do more tests and procedures that oftentimes have unclear benefits for patients, right? It's unclear if they're driving any clinical value to the patients. But they're certainly serving the bottom line of the practice. And then at the same time because of all of these changes to the way the practice may be in operation or the way medicine is practiced, you see a lot of dissatisfaction with the profession of medicine entirely.

[00:07:36] Megan Hall: So the changes that the private equity firms make, it sounds like they really affect quality of life for these physicians.

[00:07:44] Yashaswini Singh: That's right.

A lot of these trends can have very real, very human implications on job satisfaction, work-life balance, whether you see career progression, long-term in medicine and so on. And those are questions that are harder to study systematically.

Some recent work I've done has shown that PE investments of physician practices in particular are followed by physicians quitting the practice and oftentimes moving entire regions in search of alternate employment. So a recent study, I did show that physician turnover increases by about 200% when PE firms buy up a practice.

[00:08:20] Megan Hall: It sounds like they kind of start to feel like just sort of like a cog in the system instead of like an independent doctor making the right choices for their patients.

[00:08:28] Yashaswini Singh: That's exactly right. I talk to a lot of physicians for my work, just, you know, to understand what their experience is like and one doctor described it to me as being a professional athlete. They said, you're just being traded from one team to the other and you're being told how to, you know, practice and how to be a professional by people who have no idea.

And you have no say in who you get sold to. You have no say in who you get traded to. And that's just what the practice of medicine has become.

[00:08:55] Megan Hall: And most people didn't go to medical school for that.

[00:08:57] Yashaswini Singh: Absolutely not.

[00:08:59] Megan Hall: How are patients seeing these changes? How is it affecting them?

[00:09:02] Yashaswini Singh: So there's some early research that shows when PE firms invest in nursing homes and hospitals, patient care really deteriorates in the nursing home setting.

Mortality goes up by about 10% in the hospital setting. There's an increase in infections and falls and worse patient care experiences, based on how patients themselves self-report their care experience. It's a little harder to study in the setting of physician practices because as you can imagine, you know, a lot of the settings where PE firms are investing like ophthalmology practices, for example. Care is pretty standard. It's really difficult to see a complexity after a cataract surgery, for example. And so those settings are not as well studied as hospitals and nursing homes. But overall, the prognosis isn't great.

[00:09:50] Megan Hall: One of the clearest changes though, is just about the cost of health care:

[00:09:54] Yashaswini Singh: The research literature is pretty consistent that when PE firms invest in health care, the cost of care goes up. We often don't see any clear benefits materialized to patients or health care workers.

You know, we might not always see harms, but the fact that the cost of care goes up and quality doesn't change at best, means that the value of care goes down. And so to me, you know, that signals a broader problem in the sustainability of this approach.

[00:10:22] Megan Hall: One thing I don't understand about these private equity firms, you know, they make these hospitals look more profitable than they are and then they sell them.

But who is buying them? Like, who wants that investment when they know that that's the game plan, that you inflate how much something is worth and then it's kind of a disaster. Like who, who wants to make that kind of investment?

[00:10:43] Yashaswini Singh: It's such a good question. Right, and I think that specific question is the key to understanding all of this.

If we can only understand what the exit game plan is, maybe we can begin to understand PEs incentives. My research has shown that in the physician practice space, PE firms exit investments by selling to other PE firms. So it's restarting the cycle of buying to sell and who the ultimate buyer is of the asset.

Unfortunately, we don't know the answer to that question just yet.

[00:11:13] Megan Hall: But it's like you know, eventually you can't squeeze any more profit out of these organizations. So then do they just discard them? I mean, what's,

[00:11:22] Yashaswini Singh: it certainly doesn't bode well for the overall sort of sustainability of this model because by definition, PE firms need to exit their investments to deliver on their profitability expectations.

So an exit will happen. I think the question is, you know, at what point in time and what form does it take?

[00:11:39] Megan Hall: and it seems like communities sort of just end up holding the bag in the end,

[00:11:44] Yashaswini Singh: Unfortunately so.

[00:11:45] Megan Hall: So it sounds like these private equity firms come in, they sort of gut these hospitals or physician practices to make them look like they're worth more than they are, and then they sell them quickly and it's someone else's problem. So, if it's bad for physicians and it's bad for patients, what can we do about this to protect them and their care?

[00:12:07] Yashaswini Singh: Yeah, that's a great question and I spend a lot of my time thinking about that question. So there are a handful of policy levers that we have at our disposal here.

[00:12:16] Megan Hall: For hospitals, where private equity firms often sell their real estate and rent it back, policymakers could regulate, or even outlaw those practices. In response to the Steward Healthcare crisis, Massachusetts banned hospitals from signing those so called “real estate leaseback” deals.

But, for cases when private equity firms buys up a lot of smaller practices so they have more market power, Yashaswini says government officials should look at enforcing antitrust laws.

[00:12:43] Yashaswini Singh: Now, this has historically been an area where we saw the federal antitrust authorities, like the Federal Trade Commission and Department of Justice play a large role.

But increasingly in the last few years, we've seen many, many states take the charge here as well. So we've seen in Massachusetts, for example, the Office of the Attorney General is doing more. Oregon has its own health care markets oversight authority. So I think there's an increasing awareness around states that this is a problem that deserves attention now and waiting around for federal action just isn't gonna cut it.

And then the last thing where I think there's a lot of momentum and a lot of potential is a call for greater transparency. PE firms, and really any type of private investment in health care, there are no systematic reporting or disclosure requirements that enable us to understand who is the ultimate owner or financial investor in a hospital or a doctor's practice, who is employing your doctor.Many times, even doctors don't know who that is.

And so just having better data on ownership structures in healthcare will enable researchers certainly, but also policy makers and regulators to understand how much of this is a problem that needs to be addressed within their sort of local market.

[00:13:57] Megan Hall: Yashwini says, this issue matters for all of us-- whether or not we use hospitals or physician practices owned by private equity firms.

[00:14:06] Yashaswini Singh: You know, the United States health care system is one that is based on health care markets.

For better or worse, we have a market-based health care system, and so for health care to really work, which means for us to have certain levels of prices and quality that we desire for us to have access to those outcomes. We need markets to work. And markets in general don't work in health care—we don't have the type or the level of competition we need to support those types of, you know, fair, affordable prices, high quality, high access.

So the average person should care because consolidated markets directly lead to higher prices for health care. They directly lead to poor quality for health care and poor access for health care and health care expenditures increasing directly eats up into our budget for other types of expenditure.

Right? When you spend more on health care, you spend less on housing, you spend less on food, you spend less on education, and so it's a real problem.

[00:15:00] Megan Hall: Is there anything that you wanna talk about that I didn't ask you about?

[00:15:04] Yashaswini Singh: I don't think so. I think we covered a whole range of topics, but I feel good.

Well, not good in terms of the current state of affairs, but

[00:15:13] Megan Hall: We covered it.

[00:15:14] Yashaswini Singh: We covered it.

[00:15:15] Megan Hall: Yashaswini Singh, thank you so much for coming in.

[00:15:17] Yashaswini Singh: It was a great pleasure. Thanks for having me.

[00:15:20] Megan Hall: Yashaswini Singh is an assistant professor of health services, policy and practice at the Brown University School of Public Health.

Humans in Public Health is a monthly podcast brought to you by Brown University School of Public Health. This episode was produced by Nat Hardy and recorded at the podcast studio at CIC Providence.

I'm Megan Hall. Talk to you next month!

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