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Government Agencies Focus on PE Firms in Health Care

Posted  March 6, 2024

The government has increased its scrutiny of PE firms and other investors in healthcare companies.  Yesterday, the government announced a joint effort between the Department of Justice (DOJ), the Federal Trade Commission (FTC), and the Department of Health and Human Services (HHS), to inquire into “private-equity and other corporations’ increasing control over health care.”  This may signal increased government enforcement actions against PE firms and other entities that acquire or invest in healthcare companies.

The agencies noted their “concern[] that some transactions may generate profits for those firms at the expense of patients’ health, workers’ safety, quality of care, and affordable health care for patients and taxpayers.”  In particular, the agencies cited research and agency enforcement experience for the proposition that “patients, health care workers, and others may suffer negative consequences as a result of horizontal and vertical consolidation of a range of different types of providers ….”

To that end, the agencies issued a Request for Information and are seeking public comment about “the effects of transactions involving health care providers …, facilities, or ancillary products or services [such as billing management, IT, laboratories, staffing services, etc.] conducted by private equity funds or other alternative asset managers, health systems, or private payers.”  The agencies want to hear “directly from patients and health care workers about how their experiences in the health care system changed after a facility or other provider where they work or receive treatment or services was acquired or underwent a merger.”  (See the Request for Information itself for the full details.)

FTC Chair Lina Khan stated, “When private equity firms buy out healthcare facilities only to slash staffing and cut quality, patients lose out.”  “Through this inquiry, the FTC will continue scrutinizing private equity roll-ups, strip-and-flip tactics and other financial plays that can enrich executives but leave the American public worse off.”

During a workshop on this topic, HHS Inspector General Christi Grimm added, “when investors’ conduct jeopardizes patient safety or crosses the line into fraud, [the Office of Inspector General] and our law enforcement partners are exploring the best ways to hold them accountable.”

This cross-agency initiative reinforces the government’s priority in scrutinizing PE firms and other entities that acquire or invest in healthcare companies and analyzing the impact such transactions may have on patients, staff, and taxpayers.  As this blog previously noted, this will be an important space to watch in the coming year.  Find out more about the FCA and PE firms acquiring or investing in healthcare companies here.

If you would like more information on what it means to be a whistleblower or think you may have information relating to healthcare or pharmaceutical fraud, fraud involving kickbacks, or any other kind of fraud or misconduct involving a government program, please feel free to contact us so we can connect you with a member of the Constantine Cannon whistleblower lawyer team for a free and confidential consultation.

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