‘Legal looting’: Watchdog highlights markets most impacted by private equity’s growing reach in radiology, other specialties

New data from a watchdog group highlights the markets most impacted by private equity’s growing reach in radiology and other specialties.

The Private Equity Stakeholder Project’s new State Risk Index is calculated based on 16 unique indicators, the nonprofit said Tuesday. Specific to healthcare, inputs include the share of a state’s population where a single private equity firm controls a more than 30% market share of one or more physician specialty.

PESP contends that such investor backing in healthcare can lead to deteriorating patient care, higher medical costs and closure of critical facilities.

“Let’s call out private equity’s abuse for what it is: legal looting,” U.S. Sen. Elizabeth Warren, D-Mass., said in an April 9 announcement. “The Private Equity Stakeholder Project’s new state risk index is a razor-sharp tool in the fight to hold private equity accountable. Together, we’re taking on this trillion-dollar, behemoth industry that’s hurting working people and sucking money out of the rest of the economy.”

The top five states on the PE Risk Index are New Mexico at No. 1, followed by North Carolina, Arizona, Florida and Nevada. Other healthcare inputs used by the calculator include share of hospitals and nursing homes controlled by PE, related readmission rates, and average CMS star rating. Physician specialty market share was gathered from a 2023 American Antitrust Institute report, which found that PE ownership was associated with an 8.2% price increase in radiology.

PESP notes that the private equity industry has seen substantial growth. As of 2004, the field controlled about $1 trillion in assets, but that number has increased to over $13 trillion as of today. PE interest has risen in radiology, too, with investors acquiring 257 imaging practice sites as of 2021, according to research published last month in Health Affairs. Across the specialty, 15 private equity firms hold market shares greater than 30% in their service area, at an average of 48%. Four PE firms, meanwhile, hold market shares greater than 50% in radiology, controlling an average of almost 71% in the given geography, according to the study.

“By providing transparent data on the risks associated with private equity investments, we empower communities, working families, and policymakers to advocate for change and protect their states from the threats posed by unchecked private equity firms,” Chris Noble, policy director at PESP, said in the announcement.

For a counter perspective, you can read about a recent video opinion piece from private equity-backed industry giant Radiology Partners, detailing some of the myths and benefits of PE support.

U.S. Sen. Gary Peters, D-Mich., also recently announced his intent to investigate how PE firms are impacting emergency medicine.  

Marty Stempniak

Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic. 

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