Just imagine when a private equity company buys a company whose primary function is to provide medical care to mostly pts who are high acuity, complex, and most likely disabled. However, the primary function of private equity companies is to generate profits. One can only imagine what happens to the healthcare companies that they buy.

Private Equity’s Growing Role in Disability Care Demands Urgent Oversight

Patients are not lines on a balance sheet

https://www.medpagetoday.com/opinion/prescriptionsforabrokensystem/115074

Private equity (PE) has become a powerful and often invisible force reshaping how care is delivered across the country. A recent report from the Private Equity Stakeholder Projectopens in a new tab or window shines a light on one of the latest, and most concerningopens in a new tab or window, developments: the growing role of PE in services for people with intellectual and developmental disabilities (IDD).

This trend is alarming not just because of the populations involved, but because of what it reveals about how healthcare is increasingly being treated — not as a social good, but as a business opportunity ripe for financial exploitation.

The Lifeline of Medicaid-Funded IDD Services

Many of the services supporting individuals with IDD — residential facilities, home care, adult day programs, physical and occupational therapy, and more — are funded primarily through Medicaidopens in a new tab or window. For nearly 10 million Americans with IDD, these programs represent far more than care: they are the foundation of daily life, independence, and survival. Historically, these services have been provided primarily by non-profits and religious organizations.

And yet, as PE firms continue to acquire companies that provide these services, we must ask a difficult question: What happens when profitability becomes harder to maintain, especially when Medicaid dollars are cut or restrictedopens in a new tab or window? The answer, based on past precedent in other areas of healthcare, is not promising.

The PE Playbook: High Returns, Low Transparency

PE firms generally operate on a 4-to-7-year investment horizon. Their goal is generally to double or triple returns during that short window. In order to get results quickly, PE firms often resort to significant cost-cutting, rapid scaling, and creating “operational efficiency.” In sectors with strong commercial margins, this approach might be sustainable. But in IDD care — an underfunded, labor-intensive space that relies heavily on government reimbursement — this model could result in real harm.

According to the Private Equity Stakeholder Project’s report, PE firms are already applying their traditional cost-saving strategies in IDD. They are reducing staffing levels, relying on lower-paid and less-trained workers, eliminating oversight roles, and prioritizing rapid expansion. The result? Allegations of substandard care, including abuse and neglect, abound and are being investigated by federal and state lawmakers.

The changes put in place by PE firms might boost margins in the short term, but they undermine quality, safety, and continuity — the very pillars of care for individuals with IDD.

And let’s not forget: these significant policy changes will affect vulnerable individuals with lifelong needs, who are often unable to advocate for themselves and are reliant on stable, skilled, and compassionate care teams. Additionally, people with IDD already experience significant health and social inequities. They face shorter life expectancies, higher rates of chronic illness, increased mental health challenges, and greater risk of pregnancy complications. These disparities are rooted in structural barriers, including difficulty accessing care, lack of provider training, and social marginalization.

Now layer on top a business model that prioritizes efficiency over empathy and returns over relationships, and the risks become unacceptable. Indeed, the shift from mission-driven nonprofits and religiously affiliated organizations to profit-maximizing investors represents a fundamental change in how care is conceptualized and delivered — and it is a terrible shift.

We Have Seen This Before

As I have written in MedPage Todayopens in a new tab or window, private equity is not inherently bad. When firms are responsible and transparent, they can fuel innovation, expand access, and help modernize outdated systems. But when left unchecked, firms’ incentives are often misaligned with the core mission of healthcare: to care for people.

This argument is not speculative.

In fact, we have seen the negative effects of PE in emergency medicineopens in a new tab or window, where PE-backed staffing firms have contributed to burnout and dissatisfaction among clinicians. We have seen it too in nursing homesopens in a new tab or window, where aggressive cost-cutting has coincided with drops in quality and oversight. And we are seeing PE expand into behavioral healthopens in a new tab or window, where providers under financial strain are already stretched too thin to meet patient needs. Health policy researchers, patient advocacy groups, and providers worry that similar quality declines will be seen in mental health care with PE acquisitions.

What is unfolding in the IDD space has all the same warning signs, but with even higher stakes.

If we are serious about protecting people with IDD and about ensuring our healthcare system upholds the dignity of those who need it most, we must act now. We must:

• Require PE firms to disclose ownership structures and report quality outcomes in IDD settings
• Strengthen federal and state oversight to ensure that care quality, not just financial returns, is being measured
• Mandate regulatory review before PE firms can purchase entities serving vulnerable populations
• Set minimum staffing ratios and require specialized training for caregivers in IDD services
• Encourage financial firms to invest with integrity, prioritizing people over profits in high-impact areas like disability care

Healthcare is not a commodity, and people with disabilities are not lines on a balance sheet. When profit is prioritized over people, we do not just lose efficiency, we lose trust, compassion, and the fundamental integrity of care. If we are not vigilant, the most vulnerable will pay the highest price for someone else’s financial gain.

 

Filed under: General Problems