Private Equity in Health Care and the Impact on Non Profit Care


I have worked my entire career in government or nonprofits. It has led me to see the value of models that protect access to care for those who are underserved. The non profit model uses profits to re-invest in the provision of care in the community. Income is derived from profitable areas of care . Where the cost of care is not covered by insurance or there is no insurance, donors, grants and government subsidies often fill the gap.

For many years in New York State, regulations prevented private equity firms and for profit models to provide health care in some areas.

That’s changing.

Private equity seeks to make a profit. When a private equity firm buys a non profit provider or starts a new health care business, it’s expected to produce income for investors. It’s a common business model in this country.

At the same time we need to provide care to our communities that may not be profitable.

In Plunder, by Brendan Ballou, he provides a good analysis of the growing concerns about the impact of private equity in our society. The book looks at examples of private equity acquisitions in long-term care that drain income to other related corporations, leaving the non profit organization without resources to provide adequate care.

Another important study from the Columbia School of Public Health published this past July, was the first thorough review of global private equity ownership in medical settings. It stated, “Private equity investment was most closely associated with increases in costs for payers and patients in some cases as high as 32%. Private equity ownership was also associated with mixed to harmful effects on healthcare quality, while the impact on health outcomes and operations was inconclusive.”

So is one model preferable over the other, can they co exist or collaborate? Can the efficiencies from a private equity operation help not for profits find ways to reduce overhead for sustainability? Venture Philanthropy seeks to apply the principles of venture capital to achieve charitable objectives. There are several experiments going on where private capital invests in philanthropic goals such as Bain Capital’s , New Profit. Jeffrey Walker in the Stanford Innovation Review, March 2019 says private equity is showing that in order for nonprofits to succeed in this new financial environment they need to demonstrate better measurement of results, and management expertise. Investors are hands on advisors to a business and he suggests that donor expertise is often prevented from transferring their knowledge to the non profit setting.

This is a complicated arena , and one that could change the face of years of community care. Covid has placed great financial pressure on many large providers, and private equity acquisitions are adding to that financial pressure.

We need to continue to watch the impact in our communities of mergers, acquisitions and closures in health care and advocate on behalf of access and delivery of care.


Plunder, Brendan Ballou, 2023, Public Affairs

Columbia School of Public Health

The Emerging Capital Markets for Non Profits, Kaplan and Grossmn,

Stanford Social Innovation Review,

Kathryn Ruscitto, Advisor, can be reached at or at

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