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Why You Should Care if Your Doctor’s Office is Private Equity-Owned

July 25, 2023  ·  By HM&M

The days of small, physician-owned practices dotting America’s medical landscape have been dwindling for some time. Today, most patients receive care from a doctor that works for a hospital system or other large entity.

Here’s a staggering statistic from the Physician’s Advocacy Institute: Today, 70% of physicians are employed by hospital systems, private equity firms, or health insurers.

That means the majority of today’s healthcare providers are taking orders from entities that care more about profits than patient wellbeing.

And when those entities happen to be private equity firms, you could be in danger.

How Can an Investment Firm Own a Doctor’s Office?

A private equity investment firm, according to Investopedia, is “a type of alternative investment in which the investors purchase shares in privately held businesses.”

Private equity firms seek to turn a profit. So, they’ll often purchase companies and make dramatic changes to cut operating expenses, then re-sell the companies at a higher price.

One industry that has drawn investment from private equity firms in the last few years is healthcare. In the last few years, factors such as COVID-19-related market disruption and increases in healthcare spending have made all types of medical systems a mouthwatering moneymaking opportunity for private equity firms. In fact, annual deal values in the healthcare space have increased from $41.5 billion in 2010 to nearly $119.9 billion in 2019.

And, with private equity firm preying on healthcare providers, the patient is the one who pays the highest price.

The Focus is on Profits, Not Patient Care

Private equity funds, “by design, are focused on short-term revenue generation and consolidation and not on the care and long-term well-being of patients.”

According to the American Antitrust Institute and Cal Berkely, there are a few overarching outcomes:

  • Pressure to prioritize revenue over quality of care
  • Overburdening healthcare companies with debt and stripping their assets, ultimately putting them at risk of long-term failure
  • Engaging in anti-competitive and unethical billing practices

As any patient could attest to, the focus of a doctor should be on the wellbeing of their patients. When entities take over and shift the focus to profits, the ripple effects can be devastatingly dangerous.

A real-life example unfolded in the Chicago area at the hands of Duly Health and Care, formerly DuPage Medical Group, which is owned by Ares Management, L.P. Recent court filings allege that under private-equity ownership, DuPage Medical Group was mismanaged and stripped of the business components that protected patients.

The result? According to recent filings in the Circuit Court of Cook County, at least 50 patients claim they were sexually abused or mistreated by an obstetrician-gynecologist named Vernon Cannon, who committed heinous crimes under the guise of practicing medicine.
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Cost-Cutting Measures Could Eliminate Important Checks and Balances

In the DuPage Medical Group example cited above, the healthcare system was mismanaged in several ways. As mentioned, private equity firms typically slash operating budgets of the companies they acquire in an effort to improve the bottom line.

Limited operating budgets mean dangerous conditions for patients. For example:

  • Regulatory and human resources-related functions can be eliminated, meaning reports of inappropriate conduct aren’t handled in a timely or professional manner.
  • Other management and administrative functions are centralized and consolidated, pulling these positions away from front-line care facilities and out of the crucial day-to-day operations.
  • Staff reductions mean fewer nurses, nurse assistants, physician assistants, and other providers available to supervise bad actors—leaving caregivers like Vernon Cannon the opportunity to commit criminal acts without supervision or intervention.

Without the important checks and balances that ensure ethical medical practice, patients are at risk.

The Environment Can Lead to Negligence, Medical Battery, and Medical Malpractice

When private equity firms take over healthcare facilities, they often shirk their duty to implement the policies and procedures that protect patients—for example, confidential methods of reporting misconduct, appropriate employee screenings, and necessary supervision of physicians.

Without it, patients can be subjected to medical negligence, medical battery, and medical malpractice. Each of these acts is illegal. Furthermore, it’s egregiously unethical to knowingly create environments in which patients can be exposed to them.

Hurley McKenna & Mertz is uniquely qualified to support victims of any medical abuse, especially when it occurs in a private equity-owned practice.

Contact Us If You Were A Victim of a Private Equity-Owned Medical Practice

If you were victimized by the mismanagement of a private equity-owned medical practice, we’re here to fight for you. We understand the complexities of this type of case and we’re ready to meet you with compassion and understanding while you seek justice.

And if you’d like more resources about sexual abuse in private equity-owned medical practices, reach out to us here.

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The DuPage Medical Group Case Study: Sexual Abuse in Private Equity-Owned Practices

Private equity firms are acquiring medical practices across the country as a means of turning a profit, but it’s often at the expense of patient wellbeing. Private equity firms, which invest in privately held businesses either by buying them outright or through buying a number of shares in the business, seek to make a quick... Read More

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