NBC News: “Private equity's growing involvement in health care in recent years has contributed to shortages of ventilators, masks and other equipment needed to combat COVID-19, because keeping such goods on hand costs money. And to private equity, that's like putting dollar bills on a shelf.”
As we enter month seven(?!) of a global pandemic, healthcare is now THE most important issue for most Americans, surpassing the economy, education, and national security.
It’s not hard to see why: not only has COVID-19 infected millions of our neighbors and forced them to utilize the healthcare system, it has unmasked widespread deficiencies in that system that most people didn’t know existed. Millions have now felt the inadequacies first-hand, and they want change.
But a disturbing new trend could make change an even steeper hill to climb – while exacerbating the problem that has us stuck in a prolonged fight with a nasty virus.
As we noted last week, while more Americans than ever see and feel the need for higher quality and lower costs, giant private equity firms are buying hospitals, emergency rooms and other practices at alarming rates. When that happens, profits collide with personal care, and something’s gotta give. That’s especially true in the age of COVID, when fewer elective surgeries hammer hospitals’ bottom lines and the crisis demands a surplus of life-saving supplies.
Consider this report from NBC News:
“When COVID-19 hit, hospitals associated with private equity firms were early to cut practitioners' pay and benefits because the operations could no longer generate profits on elective surgical procedures postponed during the pandemic. The heavy debt loads typically associated with private equity-owned businesses hinder their ability to withstand profit downturns.”
“Private equity's growing involvement in health care in recent years has contributed to shortages of ventilators, masks and other equipment needed to combat COVID-19, because keeping such goods on hand costs money. And to private equity, that's like putting dollar bills on a shelf.”
And this chilling account from Bloomberg News:
“Morganroth explained his thinking on April 2 in a Zoom call with more than 170 dermatologists from around the country organized by the Cosmetic Surgery Forum, an industry conference. Contrary to what they might have heard, Morganroth told them, they should consider staying open during the pandemic. “Many of us are over-interpreting guidelines,” he said. For a moment there was an awkward silence. Doctors had thought they were signing up for advice on how to apply for government money that would help them meet payroll while they were shut down; they hadn’t expected to be told not to shut down at all. Morganroth continued: “We are going to be in a two-year war, and we need to make strategic plans for our businesses that enable us to survive and to rebound.”
Did you catch that? Financial conglomerates putting doctors and their patients at “war” with expert safety advice, a move that almost certainly puts patients at risk.
One alarmed doctor summed it up best:
But some doctors say that the private equity playbook, which involves buying companies, drastically cutting costs, and then selling for a profit—the goal is generally to make an annualized return of 20% to 30% within three to five years—creates problems that are unique to health care. “I know private equity does this in other industries, but in medicine you’re dealing with people’s health and their lives,” says Michael Rains, a doctor who worked at U.S. Dermatology Partners, a big private equity-backed chain. “You can’t serve two masters. You can’t serve patients and investors.”
So as the nation’s death toll climbs closer to 200,000, with no end of the virus in sight, the same private equity scheme that created many of our COVID-19 woes is gobbling up even more of the healthcare market.
People rightly want change. But not this kind.
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