American Healthcare Is Dying - Private Equity May Be the Solution

In the complex world of medicine, efficiency and quality care often walk a tightrope. As an anesthesiologist and a witness to the evolving landscape of medical institutions, I've observed the growing influence of private equity (PE) in healthcare. While this topic can be polarizing , I believe it's essential to explore the nuanced impacts of PE, recognizing its potential to guide healthcare toward a more sustainable future, albeit not without its challenges.

Efficiency and Business Expertise

Private equity's entry into healthcare brings a distinct business perspective. I'm not talking about turning healthcare into a cold, profit-driven enterprise. Rather, PE can infuse a dose of operational efficiency and financial discipline into the system. From streamlined administrative processes to better resource allocation , PE can help healthcare organizations focus on delivering care without the burden of economic inefficiencies.

Standardized and Safer Practices

In an industry where patient safety is paramount, standardization is critical. PE-backed institutions often strive for consistency in practices, which can lead to improved safety protocols. Implementing checklists and timeouts, as simple as they may sound, are steps toward minimizing human error and enhancing patient care. While we doctors may sometimes find these extra steps annoying, they are vital (and mandated!).

A Realistic Observation

In my experience, working in PE-owned surgical facilities has pros and cons. While things often run more punctually, it would be an overstatement to suggest that these environments are flawless. Like any business model, PE in healthcare has learning curves and opportunities for improvement. However, emphasizing timely service and minimizing downtime is a significant step towards better resource utilization. Nobody wants to wait around for 30 minutes because the OR isn't clean or we don't have the right instruments.

Lateral Movement - Better for Patients, Doctors, and Nurses

A notable advantage of PE involvement is the potential for easier integration across multiple healthcare entities. When several facilities fall under the same PE umbrella, there's an opportunity for smoother transitions for patients and staff, leading to a more cohesive healthcare experience.

While patients may accept the need to travel to the inconvenient downtown hospital for surgery, they appreciate the opportunity to visit their neighborhood clinic for pre- and postop visits. Multiple sites under the same PE umbrella make this possible.

The same holds for doctors and nurses. Imagine you're a physician practicing in San Diego. But, you're forced to move to Los Angeles to be closer to family. Wouldn't it be great to easily change facilities without reapplying and filling out reams of credentialing paperwork? Such lateral transfers have a tremendous power to reduce physician burnout.

Conclusion

Let's face it. Healthcare in the United States is in trouble. It's too expensive. If we don't get our house in order, outside actors will force unpalatable cuts on us. Doing nothing is not an option. In addition, physician burnout is taking a wrecking ball to healthcare staffing.

Private equity in healthcare is not a one-size-fits-all solution, nor is it the magic pill for all the sector's challenges. However, it's a path worth exploring for its potential to bring about incremental improvements in efficiency, standardization, and integration. As healthcare continues to evolve, it's essential to keep an open mind and consider diverse models, including PE, that could drive the industry toward a more sustainable future.

Dr. Gregory Charlop is an anesthesiologist based in Atlanta, GA. He's the author of The Physician Wellness Project: A Doctor's Roadmap to Job Satisfaction . He consults with doctors and health organizations about staffing and physician burnout.