Private equity firms are quietly expanding their healthcare footprint through joint ventures with nonprofit health systems — and a new watchdog report says the oversight gaps are putting patients at risk. At least 568 healthcare facilities operate under these arrangements, which can give PE firms controlling stakes in big-name nonprofits while skirting regulations. Experts are calling on federal agencies to update rules that haven't been revised since 2004.
Private equity (PE) firms have found a stealthy new way to deepen their grip on U.S. healthcare: joint ventures with nonprofit health systems. A new report from the Private Equity Stakeholder Project (PESP) reveals that at least 568 healthcare facilities operate through these arrangements — and that's likely an undercount, since it's based only on publicly available data. In some cases, PE firms hold as much as a 97% controlling interest in a hospital that still carries a well-known nonprofit name.
These joint ventures aren't just a financial maneuver — they can help PE firms sidestep state laws barring non-physicians from owning medical practices, avoid the regulatory hurdles of converting nonprofits to for-profits, and tap into referral networks without triggering standard merger reviews. Critics say the profit motive inevitably pulls resources away from patient care, and the data backs that up: care quality has declined at several highlighted facilities, including repeated Medicare jeopardy citations and some of the worst hospital rankings in their states.
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Why it matters: As PE investment in healthcare surges, these under-the-radar joint ventures are exposing patients and payers to risks with little regulatory recourse. PESP is urging the IRS, HHS, CMS, FTC, and DOJ to modernize oversight frameworks before the problem grows further.
