Private equity investments in U.S. health care benefit Americans in both rural and urban areas – enabling cutting-edge innovation and expanding access to quality care.

• Private Equity Stakeholder Project (PESP) is out with another “report” mischaracterizing private equity’s role in our health care system.
  
  
• Lacking evidence, the paper attempts to fit PESP’s antagonist narrative while ignoring existing problems in the U.S. health care system.
  
  
• Private investment plays an important role in expanding access to quality health care—investing nearly $1 trillion in U.S. health care companies since 2006.
  
  
• Our health care system faces serious challenges across the country and private investment offers critical resources—from much-needed capital infusions to management expertise.
  
  

The mysterious activist group, Private Equity Stakeholder Project (PESP), is once again targeting private investment and drawing conclusions from insufficient data. PESP’s new, flawed “report” entitled, “Private Equity Descends on Rural Healthcare,” relies on incomplete data supplemented by a few one-off anecdotes to purposefully mischaracterize private equity’s important role in supporting our nation’s health care system.

The truth: Across America, private investment fuels innovation, creates jobs, and secures retirements.

Cherry-picked data

PESP, a dark money group with questionable motives, is out with another report that cherry-picks data to fit its flawed narrative that private equity is to blame for the woes of the world. Almost three years after a global pandemic upended health care in America and across the world, this report seeks to paint private equity as the villain responsible for everything that’s gone wrong in our rural health systems—without presenting any of the facts necessary to back up this unfounded claim.

In describing their methodology, PESP makes clear they don’t have access to all the facts. The report states, “It is likely that there are rural hospitals that we did not identify…many deals are not publicly disclosed.” Instead, PESP handpicked “case studies” of private equity-owned health care firms to portray the entire industry’s efforts in health care in a negative light.

• For example, out of the 52 rural hospitals PESP identified to be run by LifePoint Health—a private equity-backed hospital system—the report cites just four with management issues.
  
  
• In another “case study,” PESP seeks to blame private equity’s role in the closing of Santa Cruz Regional Hospital—despite noting that the hospital was bankrupt before private investment bought it out of Chapter 11. The report also states that, according to hospital management, “the COVID-19 pandemic was a primary reason for the hospital[’s] financial woes…CEO Stephen Harris cited crushing debt related to Medicare advance loans as the primary reason for the closure.”
  
  
• Out of the 80 addiction treatment centers run by private equity backed Colonial/New Season across 20 states—the report highlights only five stories of management issues dating back to 2013—while noting that “there is a pronounced need for increased investment in behavioral health services in rural areas.”
  
  

Put simply, PESP hijacked incomplete data and framed it to fit their narrative. Their report and the “case studies” lack any real evidence that shows private equity is the cause of the issues at these health care facilities.

The reality is our health care system faces unprecedented challenges—particularly in our rural areas.

Health care systems and organizations that receive private investment are not immune to the economic challenges facing our larger health care industry. And blaming private equity ignores the larger story.

Private investment’s important role

From enabling cutting-edge innovation to expanding access to quality care, private equity investments in U.S. health care benefit Americans—in both rural and urban areas. From pharmaceutical innovators to local urgent care clinics, private equity has invested nearly $1 trillion in U.S. health care companies since 2006. What’s more, don’t forget that many medical endowments invest with private equity to use those returns to finance new research and treatments.

These critical investments in health care have expanded access to quality care in rural areas, particularly for lower-income people. Private equity firms are actively partnering with health care pioneers to help meet the pent-up demand for an additional 1,500 urgent care centers currently lacking in rural areas and other secondary markets, as estimated by the Journal of Urgent Care Medicine. As one example, Fast Pace Urgent Care has been private equity-backed for nearly a decade, allowing it to add 29 locations in rural Tennessee and Kentucky that increased overall patient foot traffic by tenfold and created 650 jobs from 2012 to 2016. Expanding urgent care access frees up rural hospital capacity for more pressing medical needs, all while increasing the delivery of preventative treatments like vaccines, which improve care efficiency and health outcomes for rural populations.

In hospitals, private equity increases efficiency and supports staff. Indiana University researchers found that hospitals’ “core worker ratio”—or the proportion of physicians, nurses, and pharmacists compared to overall employees—increased by 50% when acquired by a private equity firm, while the proportion of administrative employees decreased. Researchers also discovered that “core” workers’ proportion of total wages paid “increases significantly” following a private equity acquisition—indicating that administrative cost savings are passed on to providers.

The PESP report calls for increased public investment in rural health, but there is no time to wait. Despite executive agencies pumping billions of federal dollars into rural health care in recent years, rural community health programs remain at serious risk in the absence of broader policy reforms. We know that private investment offers critical resources to our nation’s struggling health care industry—from much-needed capital infusions to management expertise. And where other industries choose to shy away from our ever-important health care sector, private investment’s success is clear across the country—ensuring thousands of Americans have access to quality, affordable medical care.

The bottom line

PESP’s report is just another example of their long-standing efforts to ignore the hard facts and the bigger picture, and to siphon select data to fit their anti-private investment narrative.