Massachusetts policymakers opt to use Steward Health Care to erroneously attack private equity instead of confronting statewide health care challenges  

• A Senate field hearing this week appears set on scapegoating private equity for systemic challenges rippling throughout the U.S. health care system, including in states like Massachusetts.

• Research from Duke University, the University of Texas, and more demonstrates how private equity helps improve hospitals’ financial performance, while separate findings indicate private equity-acquired hospitals experience increased ratios of core medical workers relative to administrative staff. 

• Private equity investments are injecting critical capital into the Massachusetts health care system, financing research and development for lifesaving medicines and supporting nearly 260,000 jobs at Massachusetts-based health sector companies, per PitchBook data.

An upcoming Senate Committee on Health, Education, Labor and Pensions (HELP) subcommittee field hearing taking place in Boston, Massachusetts is set to pursue a factually deficient, politically motivated agenda that blames private investment for systemwide challenges in U.S. health care. In truth, private equity investments are driving innovation and fueling employment in the state.

As Drew Maloney, President and CEO of the American Investment Council (AIC) noted,

“Private equity has a long history of strengthening U.S. health care and improving the lives of millions of Americans, including in Massachusetts. Unfortunately, headline-seeking politicians continue to place misguided blame on our industry instead of pursuing sound policymaking to address systemic challenges head-on. Private equity will make targeted health sector investments that advance progress, drive life-saving innovation, and support the livelihoods of nearly 260,000 hardworking employees at Bay State-based companies.”

Don’t fall for political attacks in place of proven facts. Learn the truth about private equity’s critical investments in Massachusetts health care.

Upcoming hearing ignores private equity’s critical support for U.S. health care

This week’s hearing is poised to take aim at the current state of Steward Health Care, a physician-led health system that hasn’t been backed by private equity for multiple years – and whose pitfalls cannot be generalized to all for-profit organizations or private equity firms invested in health care.

Despite the fact that the now physician-led system is facing challenges, private equity’s support set Steward up for success prior to the company’s change in ownership in 2020. In particular, private equity investment helped Steward rescue several failing hospitals in the state and become one of the largest private, for-profit hospital operators in the country, all while prioritizing providing affordable, high-quality care to patients.  

The reality is that Steward’s present crisis is a symptom of larger systemwide challenges disrupting U.S. health care writ large, and Massachusetts is no exception. Earlier this year, the Massachusetts Department of Public Health declared much of the health system as “high risk,” as hospitals approach a capacity shortage not seen since the onset of the COVID-19 pandemic. On top of bordering financial collapse, many Massachusetts hospitals also have yet to fill positions left vacant since the pandemic.

However, despite common misconceptions, private equity investments are in fact helping hospitals overcome these very issues. One Health Affairs study from researchers at Duke University, the University of Texas, and more found, for example, that hospitals’ financial performance improved following private equity acquisition. Meanwhile, other research has found that hospitals acquired by private equity firms experience increased ratios of core workers, including physicians, nurses, and pharmacists relative to administrative staff – working to streamline operations and increase patient care access.

Advancing the medical field and innovative research in Massachusetts

Massachusetts is home to the country’s leading biotech companies, hospitals, clinics, and medical universities – and private equity is supporting many of the same teams developing cutting-edge technologies and delivering some of the highest quality care in the nation. According to PitchBook data, private equity backs 345 Massachusetts-based health care companies that support nearly 260,000 health care jobs, investing $21.5 billion across 107 health care deals in the state in 2022.  

For example, Cambridge-based Anthos Therapeutics – a private equity-backed company committed to finding new solutions for those suffering from cardiovascular and metabolic diseases – announced last fall that it’s developing a new blood thinner that could be a safer stroke prevention method than currently available alternatives. Findings indicate Anthos Therapeutics’ drug reduced the risk of “major bleeding events” by 74% compared to a competitor’s blood thinner – providing safer care for the 12.1 million Americans with heart conditions that increase the risk of stroke. “Without the backing of private equity, this kind of drug…would sit on the shelf and wouldn’t be possible,” Anthos CEO John Glasspool said.

The bottom line

Rather than using misguided attacks against private equity to engage in political grandstanding, policymakers should get serious about addressing ongoing challenges within the U.S. health care system. Meanwhile, private equity will continue making strategic investments to strengthen patient care and drive innovation – in Massachusetts and beyond.