Investment or extraction? Reframing private equity in healthcare.

Moral hazard is built into the structure of private equity investments, which incentivises debt-based extraction rather than value-adding investment. To craft effective regulation of private equity's participation in healthcare, and to cut through the industry's talking points, we must reframe and acknowledge private equity 'investment' as 'extraction'. In the U.S. healthcare system, this debt-based extraction has produced higher risks of bankruptcy and financial distress and associated facility closures, cost-cutting that affects patient safety and care, rising healthcare costs, inefficient use of taxpayer dollars, erosion of clinician autonomy, and increased consolidation. Policies that address extractive behaviours are the most targeted and efficient means of safeguarding patient care and may discourage the worst actors from acquiring healthcare providers. As private equity invests in health systems beyond the U.S. where regulatory regimes differ, the fundamentals of its extractive business model remain the same. Regulations must be calibrated to country specifics, but they should address the debt-based extraction built into the very structure of private equity investments. As policy debates continue, it is worth asking why we need private equity's extractive business model in healthcare in the first place.