The Biden administration has initiated an inquiry into small acquisitions made by private equity companies within the healthcare industry, amid concerns that buyouts have had a negative impact on both patients and workers, according to a report by Bloomberg.
The Federal Trade Commission (FTC), Justice Department, and Department of Health and Human Services have jointly requested public comments as they seek information about deals that were not previously reported to federal antitrust agencies. According to the law, mergers with a value exceeding $119.5m must notify the federal antitrust authorities and adhere to a minimum 30-day waiting period before finalising the transaction; transactions below the threshold do not need to be reported.
The report quotes Lina Khan, Chair of the FTC, at a virtual workshop examining the role of private equity investment in health care markets: “Over the last two years, the FTC has heard an outpouring of concern about the ways that private equity buyouts in health care have worsened outcomes for workers and patients alike.”
Khan listed “short-term, high-risk, and low-consequence ownership” as a concern, due to it encouraging a “flip and strip” approach. She also described a common practice of market roll-ups through serial acquisitions and a “buy-and-build” model, saying that it could “eliminate meaningful competition and allow new owners to jack up prices, degrade quality, and neutralise rivals without competitive checks.”
She added: “When Congress passed the antitrust laws, lawmakers made them flexible precisely because they knew that they could not predict the constantly new and evolving ways in which firms can undermine free and fair competition. Private equity acquisitions in health care are just one example of this type of evolution.”
