Maloney Op-Ed in RealClearHealth: Private Equity Is the Partner Health Care Needs
Maloney: “Many patients may not know it, but private equity investments are filling major gaps in the U.S. healthcare system and improving outcomes and experiences for millions of patients nationwide.”
Today, RealClearHealth published the following op-ed from AIC President & CEO Drew Maloney discussing how the private equity industry is a key source of capital and management expertise that strengthens hospital systems, outpatient clinics, pharmaceutical manufacturers, medical device innovation, and other life-saving initiatives.
Read the full op-ed below:
Private Equity Is the Partner Health Care Needs
By AIC President & CEO Drew Maloney
March 15, 2024
Anyone who’s gone to the emergency room or had to fill a prescription for medication knows firsthand that America’s healthcare system is one of the most complicated in the world. Many patients may not know it, but private equity investments are filling major gaps in the U.S. healthcare system and improving outcomes and experiences for millions of patients nationwide.
A recent report from the American Investment Council and PitchBook showcases how the industry serves as a key source of capital and management expertise that strengthens hospital systems, outpatient clinics, pharmaceutical manufacturers, medical device innovation, and other life-saving initiatives that improve patients’ lives and quality of care.
Increasing health care access for rural Americans
Americans living in rural and underserved communities face extensive barriers to accessing critical and, at times, lifesaving health care services. More than 130 rural hospitals have closed nationwide from 2010 to 2021. In 2023, 65 percent of rural areas had a shortage of primary care physicians.
Private equity has stepped up in helping to fill this gap, investing $15 billion in more than 250 urgent care clinics as of 2020. These urgent care centers are a critical development for rural communities, allowing patients to travel shorter distances to get the care they need while not overwhelming the limited number of hospitals in their areas.
MedExpress, a chain of Appalachian urgent care centers that has been heavily supported by private equity, was able to open new locations throughout a rural region of West Virginia where hospital closures have become common. According to a study from West Virginia University, new MedExpress clinics were “associated with fewer short-term admissions to hospitals, fewer inpatient days, fewer emergency room visits, and a reduction in outpatient visits at hospitals.”
Funding innovative and lifesaving treatments
Patients nationwide suffer from nearly 7,000 rare diseases, yet only 5 percent of those have an available treatment. That is because it takes 10-15 years on average and more than $2.6 billion to develop and bring a new medicine to market. Only 12 percent of the molecules that enter clinical trials ever receive Food and Drug Administration approval.
Private equity is also financing promising drug candidates that need time and funding to get into patients’ hands. These investments have enabled the development of treatments for several life-threatening conditions, such as Leukemia, Alzheimer’s, heart disease, HIV, and breast cancer, and for several debilitating conditions, including rheumatoid arthritis, diabetes, and ulcerative colitis.
Late last year, Massachusetts-based Anthos Therapeutics announced their new drug demonstrated a potential to significantly reduce the risk of blood clots, providing a safer alternative for the 12.1 million Americans expected to suffer from atrial fibrillation by 2030. The drug, abelacimab, cut the overall risk of bleeding by 67 percent when compared to the current standard of care used by patients. The Food and Drug Administration has said it would fast-track its review of the treatment after overwhelming success in the latest round of testing.
Giving doctors and nurses the resources to treat patients
Most doctors and nurses enter the medical profession because they want to care for patients. But in 2023, the average physician spent 15 hours per week on paperwork alone. Private equity-backed doctors and nurses spend more time with their patients according to research from Johns Hopkins University, Harvard Medical School, and the University of Oregon. Providers backed by private equity can also count on support in administrative tasks like burdensome paperwork and insurance claims negotiations.
Private equity-backed hospitals notably employ a higher ratio of doctors, nurses, and pharmacists compared to their non-private equity-backed counterparts, according to research from Indiana and Georgetown Universities. The same study found that wages increase significantly at hospitals supported by private equity and that, “PE-acquired hospitals have better survival prospects” for patients.
Private equity plays a critical role supporting quality, affordable health care in the United States. Many private equity firms specialize in health care and have hired scientists who are experts in researching and developing lifesaving cures and medical doctors who have run practices of their own.
The problems in the American healthcare system are complex and the solutions are not amenable to a quick fix. While private equity has become a convenient boogeyman, targeted investments from private equity into the American healthcare system will give Americans better access to quality care and innovative treatments and cures.
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This article originally appeared on RealClearHealth.com.
