The expanding role of business in patient care
Fact checked by Derick Wilder
Private equity firms are increasingly investing in U.S. healthcare, acquiring physician practices, specialty groups, and hospital systems. Supporters say these investments bring vital capital and operational expertise at a time when independent practices face declining reimbursements and rising costs. Critics, however, link private equity ownership to higher prices, disruptive staffing changes, and potential impacts on patient care.
Studies suggest private equity ownership results in higher prices in many specialties, and quality outcomes vary. A 2022 JAMA Health Forum study found price increases in 8 of 10 physician specialties post-acquisition, and a BMJ systematic review reported similar trends.
Still, Marco Fernandez, MD, an anesthesiologist and president of the Association of Independent Medicine, says, “There are great physicians in all settings, but you should know who owns your hospital or group.” Fernandez started the association in 2022 to bring independent, physician-owned groups together to remain independent and push back against private equity takeovers.
Private equity firms raise money from investors to acquire companies, aiming to increase the company’s value before selling — often within five to seven years.
Some hospital systems have partnered with private investors and thrived. Examples such as HCA Healthcare and Tenet Healthcare, which have successfully operated hospitals for decades, show that investor involvement can work when clinical oversight and long-term management remain strong.
Duly Health and Care operates 110 clinics across the Chicago area. Its governance includes private equity investment, but physician leaders manage the system. Paul Merrick, MD, chief physician executive and chairman at Duly, says what separates these models is usually how they are financed, not how they practice medicine.
“Every healthcare entity needs margin to survive,” Merrick says. “The difference is the capital structure. Private equity brings cash up front, but governance and clinical oversight can remain physician-directed.”
While some see private equity as a solution for struggling healthcare organizations, critics argue that profits take precedence over people — patients, physicians, and staff.
“There’s usually an exodus of incumbent providers. You create a revolving door of temporary workers, which is expensive and disrupts patient care.”
Reed Showalter, who ran for Illinois’ 7th Congressional District, has seen this happen at West Suburban Medical Center in Oak Park. Resilience Healthcare purchased West Suburban from another private equity firm, Pipeline Health, in December 2022. Since then, West Suburban faced major challenges under CEO Manoj K. Prasad, including firing doctors, closing hospital wings, and receiving a one‑star rating from the Centers for Medicare & Medicaid Services.
In late March 2026, West Suburban suspended patient care and effectively closed, furloughing many employees and halting emergency, inpatient, and clinic services amid what officials called a financial crisis tied to a new electronic medical records system. Ambulances were no longer accepted, and remaining patients were transferred or discharged. The closure came months after Resilience’s Weiss Memorial Hospital in Chicago’s Uptown neighborhood had ceased most operations in 2025 after losing Medicare and Medicaid participation and failing to meet federal standards, leaving a longstanding community institution shuttered.
“The way these private investors make money when they buy and sell a hospital is by cutting services, by cutting doctors. We can and should ban any for‑profit entity from owning our hospital systems,” Showalter says in a social media video recorded outside West Suburban.
Fernandez sees private equity as making a short-term investment. “If they’re going to purchase a physician group, they’re going to try to raise the value of that group so they can turn around and sell it,” he says.
Gail Peace, a healthcare executive with experience in investor-backed organizations, says private equity’s efficiency goals can drive growth but also result in cost-cutting. “They provide capital to grow, but revenue has to increase, or expenses have to decrease to create value,” she says. “That’s the fundamental expectation.”
How private equity affects specialties
Fernandez says private equity behavior has shifted since the pandemic and the passage of the No Surprises Act, which limits out- of-network billing — care from a doctor or hospital outside a patient’s insurance plan, which often leads to higher costs. “Before the law took effect, some national staffing com- panies billed out-of-network. Pandemic shutdowns further reduced revenue,” he says.
Private equity’s “buy-and-build” approach in specialties such as orthopedics or cardiology involves acquiring a large practice and then purchasing smaller groups to fold into a single, centralized platform, Fernandez says. This often includes imaging and other ancillary services, such as lab tests and specialized procedures, that generate revenue.
The strategy aims to increase market share, streamline operations, and boost profitability before a future sale.
Private equity tends to target markets and specialties with the highest financial return, Peace says. Procedural specialties draw more private equity interest because doctors and practices earn more from the procedures they perform, she says.
By contrast, hospital-based specialties such as anesthesia or emergency medicine don’t generate their own patients; hospitals assign cases to the contracted physician group. If hospital leadership changes the physician group, the entire team of doctors can lose its contract overnight, increasing the risk of sudden job loss and disruption.
Susan Scanlon, MD, president and board chair of Midwest Center for Women’s HealthCare, took a different approach.
Instead of selling equity directly to a firm, her practice partnered with Unified Women’s Healthcare, a private equity-backed management services organization.
The partnership enables the Midwest Center to retain physician independence and clinical autonomy, while Unified provides operational support, including physician recruitment, expansion opportunities, and IT systems. Since the partnership began in January 2023, the practice has expanded from 10 to 25 locations, increased revenue by 105% to $78 million, and more than doubled the number of providers, Scanlon says.
“Our decision to partner with Unified has proven to be such a beneficial strategic decision,” she says. “Unified has delivered on the capital and all of the initiatives they presented, which has enabled our very busy OB-GYN practice to continue to grow and thrive.”
Financial pressures, operational disruption
Independent practices face many challenges: declining Medicare reimbursement, high inflation, and rising operational costs. These pressures make private equity offers appealing.
“If it costs a lot to run a practice, but revenue is flat or declining, your practice is stressed,” Fernandez says. “That makes it easier to join a system or sell.”
Peace says patient trust needs to be part of the equation. “When a group has long-term relationships with surgeons and the community, disruption can erode trust if those physicians leave,” she says. “The patients and staff notice if continuity is lost.”
Those disruptions have impacted Fernandez directly. He says a local hospital quickly terminated two contracts held by his anesthesiology group and awarded them to private equity-backed staffing companies. “We received a 10-day termination notice during ongoing negotiations,” he says. “There’s usually an exodus of incumbent providers. You create a revolving door of temporary workers, which is expensive and disrupts patient care.”
Locum tenens — temporary clinicians filling staffing gaps — are much costlier than permanent physicians, Fernandez says. “It’s exactly the same as agency nurses. And when you see a new face every other week, how do you build that culture of safety?”
Peace suggests patients can educate themselves. “Ask whether your group is independent, hospital-employed, or investor-backed, as there can be benefits to each in certain circumstances,” she says. “That knowledge can help you understand who’s making the operational decisions and how it might affect your care.”
