The federal government could begin scrutinizing private equity-owned behavioral health practices.
The Biden-Harris administration announced new initiatives to thwart anti-competitive mergers and practices that could increase health care costs for patients. Private equity firms, health insurers and health systems will be subject to additional surveillance to foster competition in the behavioral health sector.
Although still largely fragmented, the behavioral health industry has increasingly become consolidated, at least partly because of payers’ interests. There have even been direct calls to action for increased consolidation in the behavioral health space.
Yet, health care consolidation tends to raise prices without notably increasing care quality, according to research.
The Biden-Harris Administration is taking aim at health care consolidation that may be skirting antitrust laws.
“Private-equity ownership in the health care industry has ballooned, with approximately $750 billion in deals between 2010 and 2020—in sectors including, but not limited to, physician practices, nursing homes, hospices, home care, autism treatment and travel nursing,” the Biden-Harris statement read. “Too often, aggressive profiteering by private equity-owned practices can lead to higher patient costs and lower quality care.”
Private behavioral health businesses can expect added scrutiny in the face of the newly announced actions.
A new cross-government public inquiry will aim to identify how private equity’s increasing power in the health care industry affects patients. The Department of Justice (DOJ), the Federal Trade Commission (FTC), and the U.S. Department of Health and Human Services (HHS) will issue a request for information and appoint new leadership to identify areas for future regulation and enforcement.
One new federal action will seek to identify anti-competitive “roll-ups” by increasing data sharing.
A “roll up” strategy involves a series of relatively small acquisitions that each fall below the threshold for reporting to antitrust enforcement agencies but which together can lead to market consolidation.
HHS, DOJ and the FTC will begin to share data to help identify these deals that may otherwise evade antitrust review.
Several of the other announced actions will also seek to increase transparency.
The Centers for Medicare & Medicaid Services (CMS) is releasing ownership data on federal-qualified health centers and rural health clinics. This data will allow for the identification of common owners with poor performance histories, as well as evaluations of the relationship between ownership and changes to health care costs and outcomes.
CMS will also work to improve Medicare Advantage (MA) data transparency by soliciting information from the public, beginning in early 2024, to encourage healthy competition.