Document Type

Article

Publication Title

Temple Law Review

Abstract

Private equity (PE) has come to health care. With it: layoffs, cuts, and new pressures for providers, higher prices for payers, and questions from patients about quality and excessive care. PE firms, driven solely by a profit motive, take over health care entities, “lean” them down, load them with debt, and hope to extract a profit for their investors when they sell the hospital, physician group, or nursing home. Their entry into health care has been stealthy but dramatic: upwards of a third of all for-profit hospitals in the United States, and 40 percent of America’s emergency rooms, are now run by a PE company—demonstrating the complete financialization of American health care.

Policymakers, legal scholars, medical researchers, and even senators are engaged on how best to protect America’s health care system from the worst excesses of PE ownership: maybe through tightening corporate practice of medicine rules, deploying antitrust solutions, engaging the fraud and abuse statutes, or trying to ban the practice altogether. For sure, PE ownership puts pressures on the provision of care. And nowhere is that pressure more acute than on the provider—the actor who stands in the breach between the PE owners and patients, feeling the most intense effects of a conflict between producing profits and their duties to their patients.

This piece analyzes this new burden. It highlights the challenges posed by trying to solve the PE problem by using a legal regime that is constituted to insulate clinical decision-making from profit interests. But what to do when, like in PE ownership, those profit interests may control, own, and/or heavily pressure the decision-making of the providers?

The typical tools—the fraud and abuse statutes, and, specifically, the 160-year-old federal civil False Claims Act—face daunting challenges to their efficacy in this space. From the medical necessity determination, to its whistleblowing structure, to causation, application of fraud to PE needs a creative reimagining. This serves as a first important step toward recalibrating the fraud and abuse regime to prevent the worst excesses of PE ownership—and to adequately protect America’s providers, patients, and payers from the exploding intrusion of private profit interests into the sanctified space of health care.

Publication Date

2024

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