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Is Private Equity Good for Health? Regulation and Competition Policy Lessons from a Survey of the Evidence

Author

Listed:
  • Antonio Estache
  • Ardit Litaj
Abstract
The paper summarizes the evidence on regulatory and competition policy weaknesses in dealing with healthcare market failures associated with the entry of private equity (PE) investors in the sector. It also suggests reforms that would address some of the main issues. In that context, it contributes to the debate on how fairness and social concerns could be added more explicitly to the efficiency mandate of regulatory and competition agencies. This debate and related ones in the sector have emerged in view of the growing evidence on the risks of negative coverage, pricing and quality impacts due to the margin for cream-skimming allowed to PE firms to ease their entry in the sector. Although the evidence shows that the negative outcomes are not systematic, there are common and can be associated with the failure of current regulatory and competition policies and tools to protect jointly investors, medical and para-medical staff, patients and taxpayers. The case to internalize the insights of the global experience to reassess the design of current policies aiming at diversifying the financing sources in the health sector seems to be strong.

Suggested Citation

  • Antonio Estache & Ardit Litaj, 2023. "Is Private Equity Good for Health? Regulation and Competition Policy Lessons from a Survey of the Evidence," Working Papers ECARES 2023-01, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/354650
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    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/354650/3/2023-01-ESTACHE_LITAJ-is-private.pdf
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    References listed on IDEAS

    as
    1. Eileen Appelbaum & Rosemary Batt, 2020. "Private Equity Buyouts in Healthcare: Who Wins, Who Loses?," Working Papers Series 118, Institute for New Economic Thinking.
    2. Cory S. Capps & Dennis W. Carlton & Guy David, 2020. "Antitrust Treatment Of Nonprofits: Should Hospitals Receive Special Care?," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1183-1199, July.
    3. Auriol,Emmanuelle & Crampes,Claude & Estache,Antonio, 2021. "Regulating Public Services," Cambridge Books, Cambridge University Press, number 9781108987479.
    4. Sean Shenghsiu Huang & John R. Bowblis, 2019. "Private equity ownership and nursing home quality: an instrumental variables approach," International Journal of Health Economics and Management, Springer, vol. 19(3), pages 273-299, December.
    5. Elena Prager & Matt Schmitt, 2021. "Employer Consolidation and Wages: Evidence from Hospitals," American Economic Review, American Economic Association, vol. 111(2), pages 397-427, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Athias, Laure, 2024. "Common Good Institutions, Identity in the Workplace, and Value Dynamics," MPRA Paper 120588, University Library of Munich, Germany.

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    More about this item

    Keywords

    Health Care Financing; Health Expenditures; Health outcomes; Health quality; Private Equity; Fairness; Efficiency; Regulation; Anti-trust;
    All these keywords.

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