Concerns about private equity investment in healthcare were front and center on Thursday during a special hearing of the House Ways and Means Committee on Oversight. Rep. Bill Pascrell, chairman of the committee, stated, “It’s past time for a bright light to be shined on how private equity in our health system affects patient safety, costs and jobs.” Although focus was trained on nursing home investments, members painted with a broad brush when describing their perceptions of private equity investment in healthcare.
Congressional interest in private equity investment in healthcare is nothing new. Multiple private equity firms received letters of interest from the House Committee on Energy and Commerce in September 2019 regarding investments in healthcare providers. The elevated and hostile rhetoric from yesterday’s hearing, however, is noteworthy. Rep. Pascrell is quoted saying, “Private equity’s expansion to health care is troubling because private equity’s main focus on profits is often at odds with what is best for patient care.”
Nursing homes, in particular, have been under a microscope. The unprecedented challenges of the COVID-19 pandemic have been acutely felt by nursing homes and their vulnerable residents. Last year, the House Select Subcommittee on the Coronavirus Crisis launched an investigation of for-profit nursing homes and raised the concern that private equity investment could have resulted in worse coronavirus outbreaks. Additionally, the Department of Justice (DOJ) announced its Elder Justice Initiative in March 2020, signaling that nursing homes would be a focus of enforcement for DOJ.
Nursing home operators and private equity investors can expect increasing political pressure and enforcement activity in the coming year. Certain operational decisions that affect reportable data metrics such as staffing levels and infection control protocols can mitigate the risk of congressional or DOJ attention. But if an investigation does occur, it is critical that the company obtain experienced counsel to guide the company through such turbulent waters.
Bradley’s multi-disciplinary team of healthcare, government enforcement, and congressional investigations lawyers have been actively monitoring government actions with respect to private equity investment in healthcare and nursing homes. Additional information with respect to these developments is available at the following links:
False Claims Act Risk to Private Equity Investors, ABA Health Lawyer, October 11, 2020
Skilled Nursing Facilities Face Enforcement Challenges in COVID-19 Environment, McKnight’s Long-Term Care News, August 12, 2020