Attorney General Bonta Advocates for Greater Regulation and Enforcement of Private Equity Healthcare Transactions and Abuses

OAKLAND — California Attorney General Rob Bonta today led a multistate coalition of 11 attorneys general in submitting a comment letter in response to the Federal Trade Commission, the U.S. Department of Justice, and the U.S. Department of Health and Human Services’ request for information regarding consolidation in healthcare by private equity. In today’s letter, the attorneys general lay out possible enforcement and regulatory action to address the effects of healthcare purchases by private equity groups. These actions aim to address the detrimental effects of private equity healthcare transactions that have harmed patients and undermined the financial viability of healthcare providers.

“We have seen the continuous playbook from private equity groups regarding healthcare purchases: Serving corporate profiteers by maximizing their profits at the expense of access, quality, and affordability of healthcare for Americans nationwide,” said Attorney General Bonta. “Instead, we need healthcare systems that protect patients and providers from corporate greed. That’s why I, alongside attorneys general across this country, am advocating for enforcement and regulatory action where federal and state governments can collaborate to foster a fair and competitive marketplace that curtails harmful transactions.”

Private equity-driven consolidation in healthcare has doubled over the last two decades. Research shows that between 2010 and 2020, publicly reported transactions totaled at least $750 billion in deals nationwide to acquire hospitals, physician practices, nursing homes, hospices, and behavioral healthcare. However, “roll-up” healthcare transactions, a strategy used in private equity to consolidate multiple smaller healthcare entities into a larger organization, fall under the threshold for notifying federal antitrust authorities. Recent research documents reveal that private equity-backed physician practices now control access to over 50% of available healthcare services within specialties and metropolitan areas.

In the letter, the attorneys general lay out the aggressive profiteering by private equity-owned healthcare systems, which leads to higher healthcare costs, poor healthcare quality, and less access to care for patients. To ensure fair competition and eliminate potential anticompetitive practices, the attorneys general advocate for the following enforcement and regulations: to collect and make information on organizational structure, quality of care, and enhanced payments to providers that participate in federal and state health programs available to federal and state enforcers, with no carve out or exclusions for organization structures where an investor owns less than 25% of a holding entity or healthcare asset; and prohibit participants in federal and state healthcare programs from using anticompetitive contracting practices such as anti-steering of providers to deter such practices by private equity investors and other asset managers, among other actions.

In sending today’s comment letter, Attorney General Bonta leads the attorneys general of Connecticut, Delaware, Illinois, Minnesota, New Jersey, Oregon, Pennsylvania, Rhode Island, Washington, and Washington D.C.  

A copy of the letter can be found here.