Private Equity in Healthcare: Mounting Oversight Amid Rising Concerns

A string of bankruptcies, quality-of-care scandals, and regulatory probes has intensified scrutiny of private equity’s growing role in U.S. healthcare. New reports from federal agencies, independent watchdogs, and Congressional committees are painting a stark picture of how PE investment strategies—once touted as a pathway to innovation and efficiency—may be destabilizing entire sectors of care delivery.

Regulators Sound the Alarm

In a joint report released April 10, the Federal Trade Commission (FTC), Department of Justice (DOJ), and Department of Health and Human Services (HHS) outlined “new and unique risks” posed by private equity’s healthcare acquisitions. Based on over 2,000 public comments, the agencies noted common complaints from patients and clinicians, including rising prices, staff cuts, and diminished responsiveness from care teams.

The agencies urged Congress to lower the financial thresholds that trigger federal merger review and called for expanded transparency requirements—particularly modeled on CMS’s 2023 nursing home ownership disclosure rule.

Investigations Highlight Quality Lapses

A separate Senate report, led by Senators Sheldon Whitehouse (D-RI) and Chuck Grassley (R-IA), focused on two PE-backed hospital chains: Lifepoint Health (owned by Apollo Global Management) and Prospect Medical Holdings (formerly owned by Leonard Green & Partners). Findings revealed operational breakdowns, delayed care, and alleged underinvestment that correlated with worse clinical outcomes.

In one example from Apollo-owned Ottumwa Regional Health Center in Iowa, emergency room backups led to a patient with a UTI waiting five days for transfer. The patient died shortly after being admitted (Senate Finance Committee Report, April 2025).

Leonard Green reportedly extracted $645 million in dividends from Prospect, including $424 million for its own investors, while the hospital chain fell to the bottom 17% of CMS quality rankings and took on over $3 billion in liabilities.

Bankruptcies Mount

According to the Private Equity Stakeholder Project, seven of the eight largest healthcare bankruptcies in 2024 involved PE-backed companies. These include the collapses of Steward Health and Prospect Medical Holdings—systems that once operated dozens of hospitals and served millions of patients.

“Private equity often uses high-risk financing strategies like sale-leasebacks and dividend recapitalizations that leave healthcare operators overleveraged and vulnerable,” the group’s April 2025 report stated.

Will Policy Catch Up?

Despite the volume of investigations, regulatory capture remains a concern. While Congress considers tightening disclosure requirements and expanding review authority, some PE firms are pivoting to joint ventures with nonprofit health systems—structures that may evade antitrust oversight despite resembling de facto consolidations.

Meanwhile, the FTC is controversially raising the pre-merger notification threshold from $119.5M to $126.4M in 2025, even as many call for lower thresholds to catch serial roll-up strategies used by PE investors.

Implications for Providers and IT Vendors

As PE ownership increasingly intersects with EHR platforms, revenue cycle vendors, and staffing services, healthcare IT vendors may face indirect reputational or operational risks. Clinician dissatisfaction can directly impact adoption of digital tools, while financial instability can derail contracts or integration projects.

The longer-term concern is systemic: as capital flows concentrate in fewer, debt-laden operators, both access and quality may suffer—raising barriers for innovation and making value-based care targets harder to achieve.

Private equity is deeply embedded in the healthcare delivery system, but its presence is no longer seen as benign. As policymakers debate new safeguards and enforcement tools, one thing is clear: the unchecked growth of PE in healthcare may soon give way to a new era of accountability—or continued decline in patient trust and clinical outcomes.