Should ever increasing profits be the driver for healthcare? The question may be: what role does healthcare play in our society? How much of a right is healthcare, and how much of a right is there to profit from a societal need? As practices and hospital systems chase profit, studies are suggesting that private equity may be incompatible with improving quality in healthcare.

Everyone benefits from better healthcare outcomes. We as consumers of health care want to know that we can trust our medical providers, whether it is for a scheduled appointment or for an emergency. What sort of compromises should we be prepared to make in order to get quality healthcare?

You may have read some of our prior pieces about consolidation in healthcare and the attendant drop in choice and increase in price that comes with less choice. You may have also read about the creep of private equity into medical practices. For years private equity was investing in practices with high profit and low risk, such as dermatology. More and more though we are seeing private equity buying up hospitals across the country.

And, unsurprisingly, investors are targeting profitable, successful hospitals that will provide a significant return on investment. Though in a private clinic setting avenues for profit are found in expensive procedures and trimming staff, the model is quite a bit different with hospitals. These complex entities provide multiple, creative streams of revenue for investors. Hospitals that formerly owned their multiple buildings are seen to sell their facilities and rent them back from the new owner. Hospital assets are stripped for investor profit.

What does this mean for quality of care? Well, Medicare data reflects that hospital complications increase after private equity acquisition.

So, when a hospital is sold to private equity, its assets are stripped and budgets are trimmed, complications arise. Who could have foreseen such an outcome?