In 2017, private equity deals in health care rose 17% from 2016, making up 18% of deals made globally. Most of the buyout activity was comprised of physicians, hospitals, and other health care delivery facilities. Suhas Gondi, BA, a second-year medical student at Harvard Medical School, and Zirui Song, MD, PhD, assistant professor of health care policy and medicine, discuss the potential implications of private equity investments in health care delivery in a recent article in JAMA.

Health care is attractive to private equity investors for multiple reasons. These include opportunities to consolidate bargaining power among providers, the perception of health care as recession-resistant, and the increasing demand for health care services in an aging population.

To date, the effect of private equity investments on health care remains largely unknown, but the incentives in private equity raise some concerns. The need for investors to achieve high returns in a short time window may conflict with the need for investments in quality and safety. Some practices have reported a short-term profit mentality surpassing long-term investments in equipment and facilities.

As private equity in health care continues to grow, policy makers should ensure that these investments remain beneficial for health care providers and patients. Private equity involvement can raise the risk of overutilization, practice instability, and patient safety concerns. However, private equity could also benefit patients and make the health care system more efficient. Gondi and Song suggest that greater transparency over private ownership of physician practices may help patients make more informed decisions about where to receive their care and inform policymakers as well.