US Federal Trade Commission: Evaluating the Role of Private Equity in Health Care Growth

On May 6, 2024, Josh Kraft, policy analyst in the Bureau of Consumer Protection at the US Federal Trade Commission (FTC) in Washington, DC, read an article announcing the bankruptcy of Steward Health Care, LLC (Steward), a network of hospitals formerly owned by private equity (PE). The article was the perfect illustration of the investigation that Kraft was working on into the growing role of PE investment in the health-care industry. Over the past two decades, PE involvement in health care had expanded dramatically across the USA. Unlike conventional for-profit hospital owners, which typically sought steady long-term returns, PE firms focused on rapidly increasing the short- to medium-term value of their holdings before reselling. Because these acquisitions were often financed with large amounts of debt and structured for quick profit extraction, critics argued that PE’s financial model created stronger pressures to cut costs, reduce staffing, or prioritize revenue-generating services, which were potentially at odds with hospitals’ public mission to provide high-quality, equitable care.

Kraft’s recommendations carried significant health and economic implications for US consumers. He faced a critical decision on whether to advise the FTC to implement policy changes to address the growing influence of PE in the health-care sector or to maintain the existing approach and allow PE firms to continue pursuing market-driven solutions to the industry’s complex challenges.