U.S. lawmakers are taking aim at private equity in health care. Here's what is happening in Canada

In the U.S., the growing role of private equity firms in health care is coming un‐ der heightened scrutiny, with Senate committee hearings and a cross-gov‐ ernment public inquiry launched earlier this year.

"When private equity fir‐ ms buy out health-care facili‐ ties only to slash staffing and cut quality, patients lose out," said Federal Trade Commis‐ sion Chair Lina M. Khan in a statement.

The U.S. Federal Trade

Commission and two U.S. de‐ partments are looking at whether consolidated owner‐ ship may sacrifice patient care and worker safety to generate profits for privateequity investment firms, while costing taxpayers.

In the U.S., companies backed by private equity fir‐ ms manage emergency rooms and anesthesiology practices. Private equity firms are even buying whole hospi‐ tals in the U.S.

That's not happening in Canada, but private equity in‐ vestment firms have bought up facilities outside of hospi‐ tals, starting about 25 years ago with long-term care homes. That arrangement didn't show up on the public radar until the COVID-19 pan‐ demic emergency, which hit care homes exceptionally hard.

Canadian researchers have found a disproportion‐ ate number of deaths in long-term care residences owned by private equity fir‐ ms and large chains.

As some provinces wel‐ come private equity in public health care, the firms are in‐ creasingly involved in nursing homes and surgery clinics. Here's what experts say has already happened and what could be around the corner.

Private equity in Canada so far

So far, private equity firms have bought clinics outside of hospitals in Canada offer‐ ing services including:

Provinces still pick up the tab for patients' medically necessary surgeries, such as cataract removals or hip and knee replacements.

One company, Clearpoint Health Network, owns a chain of private surgical cen‐ tres running 53 operating rooms across the country.

Clearpoint is wholly owned by the $1.5 billion pri‐ vate equity firm Kensington Capital Partners Ltd. Kensing‐ ton launched the chain through a $35 million pur‐ chase of clinics in Ontario, Manitoba, Alberta and B.C. in 2019.

Private equity defined Aprivate equity firm is an investment firm that pur‐ chases private companies

that are not listed on stock exchanges and therefore has less regulatory oversight.

In health care, private eq‐ uity firms may buy up inde‐ pendent clinics to create chains. The goal is to achieve economies of scale by, for ex‐ ample, purchasing medica‐ tions in bulk or hiring a book‐ keeping firm to manage mul‐ tiple clinics - creating profits for shareholders.

Economist Armine Yal‐ nizyan in Ottawa observes corporate consolidation in health care, long-term care and child care in Europe, the U.S., and increasingly in Canada. Yalnizyan is the Atkinson Fellow on the Fu‐ ture of Workers.

Private equity ownership usually consists of short-term investments, about four to seven years, before the com‐ pany is sold.

"Companies are bought and held just long enough to make the whole enterprise more profitable and then they're flipped for a higher price" to another company, Yalnizyan said. "It's kind of like house flipping, except it's corporate consolidation." What's the evidence? Various studies have tried to quantify the benefits and harms of private-equity own‐ ership in health care.

A 2023 systematic review published in the BMJ looked at 55 studies from eight countries including Canada, mainly focused on privateequity ownership of nursing homes, hospitals, derma‐ tology clinics and ophthal‐ mology clinics.

In their review, Joseph Bruch of the University of Chicago and co-authors said evidence across studies sug‐ gest mixed impacts of private equity ownership on health‐ care quality, with greater evi‐ dence that this type of own‐ ership "might degrade quality in some capacity rather than improve it."

Research on impacts of private equity ownership on health outcomes and costs to operators were less prevalent, they said.

The American Investment Council, which advocates for the private equity industry, disagrees with FTC's Khan.

The council said it provided the FTC with inde‐ pendent research and data demonstrating the value of private equity investments "in supporting quality, afford‐ able health care," such as in‐ vesting in nursing homes that receive less federal sup‐ port, funding treatments and expanding access to urgent care in rural communities.

Karen Palmer, a health policy researcher and analyst at Simon Fraser University in Burnaby, B.C, began her ca‐ reer in the U.S..

"At the moment, one single private equity invest‐ ment firm owns the company that owns 14 of our surgical centres across Canada," Palmer said, referring to Clearpoint.

"I'm concerned about a monopoly and the power that one company has in our health-care system when they own so much of our sur‐ gical capacity."

WATCH | Private equi‐ ty's growing role in health care in Canada:

In a response to questions from CBC News, Clearpoint said its mission centres on patient safety and patient ex‐ perience, adding it is a "trusted partner of public health authorities in every province where we operate."

"Delivering essential but lower-acuity, routine day pro‐ cedures in community surg‐ ery centres allows hospital operating rooms to focus on more complex, critical surg‐ eries," Mark Angelo, chief op‐ erating officer of Clearpoint Health Network, said in a statement.

"All centres follow the provincial requirements for staffing and clinical quality standards. Our focus is pro‐ viding comprehensive surgi‐ cal procedures that do not typically have optional addons or upgrades."

In 2023, U.S. researchers found a 25 per cent increase in infections and falls in pri‐ vate-equity owned hospitals compared with hospitals fully under Medicare, a federal health insurance program in the U.S. that covers seniors.

Palmer said in long-term care homes in Canada, pri‐ vate equity is also tied to more falls and infections re‐ lated to having fewer staff. She wonders if corners get cut to carve off funds govern‐ ments paid to the facilities line the pockets of share‐ holders.

Transparency questions raised

Because private equity fir‐ ms aren't subject to the same rules as publicly traded com‐ panies, there's little trans‐ parency when it comes to private equity's involvement in the health sector, Palmer said.

Also, most provinces don't require facilities to report much on their ownership structure, so the extent of in‐ volvement in surgical ser‐ vices is unclear, said Andrew Longhurst, a health policy re‐ searcher at Simon Fraser Uni‐ versity.

WATCH | Province pays for-profit clinic double hos‐ pitals for operations:

To increase transparency in the U.S., several state legis‐ latures such as New York now require or have pro‐ posed notifications when pri‐ vate equity firms purchase a health-care facility over a cer‐ tain size.

In Canada, there is some data on ownership of longterm care homes.

Overall, 54 per cent of long-term care homes in Canada are privately owned, according to the Canadian In‐ stitute for Health Informa‐ tion.

Private equity firms are drawn to long-term care homes because of their real estate assets, Yalnizyan said. When the firms move in, it buys the property, cleaves it off to sell for condos for in‐ stance and then divests the care portion of long-term care.

For Dr. Danyaal Raza, a family physician with Unity Health's St. Michael's Hospi‐ tal in Toronto, it matters who owns long-term care homes in a way that doesn't apply to other businesses.

"When you're shopping for a cell phone or a car you can compare how many min‐ utes you get per month, or, you know, miles per gallon," said Raza, past chair of Cana‐ dian Doctors for Medicare. "But when you're going to a doctor, or you're going to a hospital, you can't tell."

There's a lot more trust in‐ volved when getting health care, he said. "That's why we have to treat it as a public good, not one that we can boil down to comparison shopping."