The American Investment Council wrote a letter on March 4 addressed to Federal Trade Commission Chairwoman Lina Khan expressing its apprehensions regarding the agency’s virtual hearing to be held the next day on the purported “harmful effects” of private equity investment within the healthcare sector.
Specifically troubling to the AIC was the apparent bias evident in the speaker lineup, which consisted of a handful of one-sided people eager to attest to the deleterious effects of private equity involvement in healthcare markets. In fact, a mere glance at the commission’s agenda and speaker roster was all it took to reveal the skewed nature of the event.
Opening remarks by Khan herself, the FTC’s foremost neo-Brandeisian scholar, were followed by remarks from Justice Department Assistant Attorney General for Antitrust Jonathan Kanter, a prominent advocate of the New Brandeis school of antitrust law and a central figure within the New Brandeis “hipster” antitrust movement. All this was a setup for the keynote speaker Eileen Applebaum, a leading critic of private equity in healthcare.
The public workshop was succeeded by a cross-government public inquiry into the “impact of corporate greed in health care.” The inquiry further laid bare the commission’s inherent hostility against private investment. Sensational headlines such as “Patients for Profit: How Private Equity Hijacked Healthcare” from KFF Health News and “How Private Equity Makes You Sicker” from the American Prospect only fuel the “private equity media panic.”
Unfortunately, this partisan attack of private equity writ large not only falsely misrepresents the industry but, more importantly, undermines private equity’s vital role in supporting America’s ailing healthcare infrastructure. Data from the AIC show how businesses bolstered by private capital not only outperformed nonprivate equity-backed companies during the COVID-19 pandemic but also how private investment continues to provide long-term benefits for businesses long after its departure.
Other research from media watchdog group Fairness & Accuracy in Reporting reveals how private equity critics blatantly misunderstand the market forces that underpin U.S. healthcare and overestimate the extent to which private equity-controlled firms have “hijacked” or “taken over” the medical industry.
While private equity-owned providers are frequently scapegoated for today’s exorbitant healthcare costs and lackluster coverage, the truth of the matter is that hospital chains affiliated with churches and universities employ far more doctors than private equity-backed physician practices, so private equity’s outsize role in U.S. healthcare is overstated and deliberately exaggerated.
Additionally, research from FAIR reveals how the healthcare crisis sweeping the nation is rooted in entrenched cycles of exploitation and patient abuse; these cyclical episodes persist regardless of the specific corporate structure at play and have nothing to do with private equity. Meanwhile, problems such as chronic underfunding and understaffing continue to mire the industry. It’s worth noting that these challenges are not exclusive to private investment; they are pervasive throughout the entire healthcare sector.
And while “for profit” healthcare gets a bad rap, eye-opening reporting from the Wall Street Journal reveals how nonprofit hospitals engage in the same profit-maximizing techniques, such as systematic staff downsizing and sharp budget cuts, as openly commercial healthcare facilities.
The takeaway? Misconduct pervades across the board.
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As an independent government agency, the FTC has a duty to remain impartial and nonpartisan. Today’s staggering healthcare costs and subpar coverage reflect systemic dysfunctions within the U.S. healthcare market that cannot be isolated to private equity and necessitate comprehensive policy reforms.
FTC head Lina Khan’s one-sided inquiry into the negative effects of private equity’s investment in healthcare amounts to a gross violation of the agency’s original mission. Contrary to portrayals in legacy media, private investment in the healthcare sector is not the villain it’s often made out to be, but rather a benefit to the public.
Nathalie Voit is a Young Voices contributor and an alumnus of the University of Florida. Her writing regularly appears on C3 Solutions.
