In an April 15 commentary, Forbes chairman and editor-in-chief Steve Forbes outlined what he believes are misconceptions and over-generalizations about private investment activity in healthcare.
Here’s an overview of Mr. Forbes’ commentary:
1. Mr. Forbes presents the idea that private investment has been “villainized” by “far-left” political groups and “subsidy-seeking” business entities, whom he claims do not offer constructive solutions to some of the ills created by private investment across a range of industries.
2. As an example, Mr. Forbes cites the case of Dallas-based Steward Health Care and the financial turmoil its bankruptcy has produced, as well as the resultant backlash from lawmakers, health leaders and community members affected by the system’s hospital closures.
3. Mr. Forbes argues that the Steward events are reflective only of bad actors and mismanagement within the situation itself, rather than a cautionary tale of private investment in healthcare overall.
4. “The scandal has been highlighted endlessly in an attempt to tarnish the entire private-investment community. However, taking isolated and odious episodes like this and using them as a pretext to impose punitive legislative and regulatory punishments on the rest of the private-investment community is shortsighted and harmful to people’s health,” he writes.
5. He argues that increased regulation of private investment in healthcare in response to the Steward collapse and similar situations will ultimately harm healthcare access. “For every example like Steward, there are numerous others in which private capital provided a critical lifeline of investment and management expertise to help struggling healthcare systems survive and thrive,” he writes.
6. Mr. Forbes goes on to cite two pieces of research to support his claims. A 2020 analysis that found private capital had invested $15 billion in hundreds of urgent care centers in both urban and rural areas hit hard by hospital closures and a shortage of primary care physicians. Research from Georgetown University also found that hospitals backed by private capital experienced increased wages and reduced administrative burden.
7. He also claims that many primary care and specialty treatment medical practices have found private equity helpful in managing back-office functions while “enabling them to continue to operate independently and deliver quality healthcare to their communities.”
“The alternative for many is being forced to fold their practices into giant health conglomerates that place providers, insurers, pharmacies and corporate middlemen under the same bureaucratic umbrella. In most cases, patients don’t like that approach and neither do healthcare professionals,” he continues.
8. Mr. Forbes also notes that private equity has played a major role in medical innovation within the U.S. and in the support of university research centers, healthcare startups and pharmaceutical companies, creating “high-skilled, high-paying jobs,” while ensuring Americans’ access to cutting-edge treatments.
9. “Villainizing private equity is an easy and irresponsible way for the left to avoid finding successful solutions to the significant challenges that still plague our healthcare system — many of which politicians and bad corporate actors have created,” he concludes. “Unfortunately, this finger-pointing, demagogic approach could drive poor policy decisions that end up limiting needed investment.”
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