As the Covid-19 pandemic continues to surge in the United States, Americans are becoming more aware of the deficits in their health care delivery system. Invisible to many, however, is the rapidly expanding role that private equity is playing in health care — especially for women.
Private equity firms use money from corporations or wealthy individuals to purchase full or partial ownership in other businesses, and expect annual returns as steep as 20%. In 2019, the total disclosed value for all health care-related private equity deals was the highest on record, at $79 billion, five times what it was a decade ago.
The increasing influence of private equity in a range of health care delivery settings such as physician staffing, nursing homes, and hospitals is not new. But our research reveals a precipitous rise of private equity activity in women’s health.
Whether in markets for egg donations or high-profit, hospital-based women’s health centers, investors have long seen financial opportunities in women’s health. But the recent rise of private equity in this area marks a novel form of investor attention with unknown implications. The industry has set its sights on women’s health in part because of its high profitability and the limited regulation of fertility services. It also presents an opportunity to consolidate health practices at once and hold more market power.
To try to capture the extent to which private equity firms have expanded into women’s health, we traced all women’s health care organizations that gained a private equity affiliation through a merger, acquisition, or undisclosed financial partnership between 2010 and 2019. These include individual practices, physician networks, and clinics focused on obstetrics and gynecology (OB-GYN) or fertility. As we reported in JAMA Internal Medicine, there was relatively little activity from 2010 to 2016, followed by a rapid influx of private equity activity in both OB-GYN and fertility clinics, with more than twice as many affiliations from 2017 through 2019 as seen as the previous seven years. As of the start of 2020, we identified and mapped 1,340 offices and 3,989 providers that had gained a private equity affiliation since 2010, located in 39 states throughout the country.
Investors argue that private equity investment can improve innovation, efficiency, and patient care. We believe that some caution is warranted. Private equity’s goal is to profit, and to profit quickly — acquisitions are typically sold within three to seven years. This may be a good business model for investors, but it can conflict with the goal of providing women with safe, accessible, and high-quality health care. The pressures of cutting costs could result in cutting corners, and the need for increased revenue may encourage offices to push unnecessary and expensive procedures on patients.
Our findings likely underestimate the scope of private equity expansion into women’s health. Because private equity companies don’t always include information about the size of their deals in public statements — or release detailed public statements at all — complete knowledge about industry dealings lies behind closed conference room doors. What’s more, investments are frequently complex and a private equity firm may lie far upstream from a doctor’s office as an obscure parent company.
Those are problems. The public should be able to access comprehensive and transparent information about whether their providers or health care practices have private equity affiliations.
The lack of transparency also means many women are unaware that a particular clinician or practice has a relationship with a private equity firm. This leaves them without a critical tool for assessing the financial incentives motivating their health care provider.
Fertility services provide one example of how this could go wrong for patients. Most fertility services are either not covered by public and private insurance plans or only partially covered by them. This means many couples and individuals seeking medical assistance to get pregnant cover exorbitant costs on their own and may even need to take out potentially debilitating loans in the hopes of one day starting a family. Fertility practices underwritten by private equity, under intense pressure to deliver year-after-year increases in profits, may counsel patients to undertake expensive procedures even when financially unsound or medically risky, or may not provide accessible payment programs to those without financial means.
In our study, the offices purchased by private equity firms were generally located in metropolitan areas with above-average median incomes. This raises questions about the extent to which the capitalization of women’s health is actually aligned with addressing unmet needs and improving care.
Similar concerns have also been raised around “femtech,” an industry buzzword referring to women’s health-related software and technology that is projected to be worth $50 billion by 2025. From period trackers to pregnancy support technologies, investors promise to diversify and liberate women’s health and sexual well-being. But these technologies are typically geared toward a specific, and profitable, demographic: higher-income white, cisgender woman.
Should we trust a financial industry that is both notoriously hostile towards women and run overwhelmingly by men to create sustainable and equitable health delivery services for women?
We have no crystal ball to see what the continuing buyouts of women’s health care practices will mean for women’s health in the United States. But understanding this is essential.
To determine how the incentives of private equity firms interact with clinicians’ mission of caring for women, policymakers, researchers, and the general public need to stay vigilant. Deals between private equity firms and health care providers should be transparent, and ethical standards should be put in place to ensure that profits don’t get in the way of people, and that patients are able to access comprehensive, equitable, and affordable care.
Alexander Borsa is a Ph.D. student in sociomedical sciences at Columbia University. Joseph Dov Bruch is a Ph.D. candidate in population health sciences at Harvard University. Sarah S. Richardson is a professor of the history of science and of studies of women, gender, and sexuality at Harvard University, and director of the university’s GenderSci Lab, of which Borsa and Bruch are members.