Pascrell Opening Statement at Oversight Subcommittee Hearing on Examining Private Equity's Role in the U.S. Health Care System
(As prepared for delivery)
It is past time for a bright light to be shined on how private equity ownership in our health care system affects patient safety, cost, and jobs.
Private equity’s influence stretches like an octopus. In 2020, we saw $66 billion in private equity investment across the health industry. This is a 21 percent increase from 2019. This includes large hospitals, physician practices, dental practices, and nursing homes.
Private equity’s expansion into health care is troubling because private equity’s main focus on profits is often at odds with what is best for patient care.
Private equity’s business model involves buying companies, saddling them with mountains of debt and then squeezing them like oranges for every dollar.
In North Jersey, we watched this model dismantle our beloved homegrown company Toys R Us. Corporate executives fired tens of thousands of workers in the name of profit.
Now, I worry private equity has moved on from toy stores to hospitals, physician practices, and nursing homes – many of which rely on taxpayer-funded programs.
Understanding the web of transactions is like Russian Nesting dolls. The lack of transparency in private equity ownership makes proper oversight by regulators nearly impossible.
Patients seeking answers from a hospital owned by a hidden parent company evokes the scene in the Grapes of Wrath where the displaced farmer Muley Graves despairs to find out just who is seizing his house.
Private equity’s harms to the American health care system are borne heavily by the most vulnerable: communities of color, rural and underserved areas, the elderly, and people with disabilities.
Research has shown nursing home buyouts are linked with higher patient-to-nurse ratios, lower-quality care, declines in patient outcomes, weaker inspection performance, and increased mortality rates.
A recent study revealed damning data on private equity’s influence on health care. The researchers used Medicare data covering 1,700 nursing home facilities bought by private equity firms from 2000 to 2017. They estimated that over 20,150 Medicare beneficiaries died due to private equity’s ownership of nursing homes in those years.
The study also found private equity’s ownership increased Medicare billing by 11 percent. Is that in the best interest of the patients or shareholders?
Private equity’s track record during the pandemic is not pretty. We lost more than 170,000 nursing home residents.
In New Jersey, residents at private equity-owned nursing homes have had a disproportionate number of COVID-19 infections and fatalities. How many grandmothers and grandfathers died because profits were prized above lives? And are our taxpayer dollars funding this?
Today’s hearing will discuss an important initial step, increasing transparency. A true assessment of private equity’s role in our health care system is needed.
I especially want to thank Chairman Richard Neal for his focus and leadership on this topic. Last Congress, Chairman Neal introduced the Transparency in Health Care Investments Act (H.R. 5825), which would provide reporting requirements for private equity entities invested in health care facilities.
I look forward to working with Chairman Neal and all our committee members on issues affecting private equity, including transparency, Medicare spending, and tax policy like carried interest loophole reform, in this session.