News Release: New Study Calls Attention To The Growing Presence Of Private Equity Ownership In The Home Healthcare Sector


June 7, 2023

American Antitrust Institute:
Angela Tse

Americans for Financial Reform Education Fund:
William Pierre-Louis, Jr.

New Study Calls Attention To The Growing Presence Of Private Equity Ownership In The Home Healthcare Sector

Washington, D.C. – Today the American Antitrust Institute (AAI) and Americans for Financial Reform Education Fund (AFREF) issued a new report: The Growth of Private Equity Ownership in the Home Healthcare Market. The report takes a close look at the incursion of private equity into a critical healthcare market – home healthcare. Home health companies, working like employment agencies, hire aides to provide a range of medical services to patients, primarily the elderly or disabled, directly in their homes.

Private equity’s rapidly growing presence in the home healthcare sector has contributed to the consolidation of hundreds of providers across the country into three dozen flagship parent brands. This weakens incentives to deliver high-quality services at affordable prices, according to the AAI-AFREF report. Private equity now profits from a consolidated marketplace for home healthcare, a trend that is particularly pronounced at the local level.

“This report is a red flag for competition enforcers and policymakers. It shows concentrated home healthcare markets, rapid incursion by private equity, and the presence of large players,” said Diana Moss, AAI President and economist. “This should serve as an early warning that these markets should be carefully monitored and consolidation scrutinized.”

The report highlights the incompatibility of the private equity investment model with the delivery of high quality healthcare services and the stability of healthcare markets. The analysis  is based on a novel dataset that finds that private equity firms currently own more than 500 home healthcare providers. These companies collectively receive $1.4 billion in public funding through Medicare payments each year.

Private equity is a Wall Street creation that uses money raised from pension funds, endowments, insurance companies, and wealthy individuals to buy companies, with the intention of maximizing profits and selling them on a 3-5 year time horizon. Extensive research has documented the negative impact on employment and product and service quality under private equity ownership, but information is often hard to come by because the ownership structure is very opaque.

“The presence of private equity in home healthcare is undoubtedly larger, but without meaningful disclosures, regulators and the public are left in the dark about the full impact of private equity ownership on competition and patient well-being,” said Oscar Valdes Viera, research manager at AFREF.  “Private equity’s own-to-plunder business model is incompatible with delivering health care in general, as the evidence from hospitals and other sectors shows. Concentration in home health care can only exacerbate these harms.”

Major takeaways from the report include: 

  • Home healthcare is a rapidly-growing and high return on equity market in the healthcare sector that is attracting significant interest and potential disruption from private equity investment.
  • The private equity investment model raises concerns over its compatibility with promoting competition, affordable and high-quality healthcare, and stable and resilient healthcare markets.
  • Private equity accounts for a relatively small proportion of ownership but its rate of acquisition is far greater than other ownership types and only a few private equity players control a large proportion of Medicare payments.
  • MSA-level home healthcare markets display higher levels of concentration overall and private equity owned or backed firms have made significant and rapid incursions, now operating in over 50% of all markets.
  • High market concentration, the role of large home healthcare firms, and the potential for further incursions by private equity emphasizes the need for antitrust enforcers and regulators to engage early.
  • The data collection process for this report emphasizes that significant reforms are needed to ensure that the private equity industry discloses full and meaningful data that can be used to evaluate the impact of private equity ownership on competition.

The report was authored by Diana Moss, President and economist at AAI, and Oscar Valdes Viera, Research Manager at AFREF. This joint project between AAI and AFREF was made possible by a grant from the Antimonopoly Fund of the Economic Security Project.

Read or download a pdf version of the full report.