Topic: When private equity firms invest in women’s health clinics, who benefits?

As the Covid-19 pandemic continues to surge in the United States, Americans are becoming more aware of the deficits in their health care delivery system. Invisible to many, however, is the rapidly expanding role that private equity is playing in health care — especially for women.

Private equity firms use money from corporations or wealthy individuals to purchase full or partial ownership in other businesses, and expect annual returns as steep as 20%. In 2019, the total disclosed value for all health care-related private equity deals was the highest on record, at $79 billion, five times what it was a decade ago.

The increasing influence of private equity in a range of health care delivery settings such as physician staffing, nursing homes, and hospitals is not new. But our research reveals a precipitous rise of private equity activity in women’s health.

Whether in markets for egg donations or high-profit, hospital-based women’s health centers, investors have long seen financial opportunities in women’s health. But the recent rise of private equity in this area marks a novel form of investor attention with unknown implications. The industry has set its sights on women’s health in part because of its high profitability and the limited regulation of fertility services. It also presents an opportunity to consolidate health practices at once and hold more market power.

To try to capture the extent to which private equity firms have expanded into women’s health, we traced all women’s health care organizations that gained a private equity affiliation through a merger, acquisition, or undisclosed financial partnership between 2010 and 2019. These include individual practices, physician networks, and clinics focused on obstetrics and gynecology (OB-GYN) or fertility. As we reported in JAMA Internal Medicine, there was relatively little activity from 2010 to 2016, followed by a rapid influx of private equity activity in both OB-GYN and fertility clinics, with more than twice as many affiliations from 2017 through 2019 as seen as the previous seven years. As of the start of 2020, we identified and mapped 1,340 offices and 3,989 providers that had gained a private equity affiliation since 2010, located in 39 states throughout the country.

Investors argue that private equity investment can improve innovation, efficiency, and patient care. We believe that some caution is warranted. Private equity’s goal is to profit, and to profit quickly — acquisitions are typically sold within three to seven years. This may be a good business model for investors, but it can conflict with the goal of providing women with safe, accessible, and high-quality health care. The pressures of cutting costs could result in cutting corners, and the need for increased revenue may encourage offices to push unnecessary and expensive procedures on patients.

Topic Discussed: When private equity firms invest in women’s health clinics, who benefits?

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