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As private equity firms strengthen their financial hold on the American healthcare system, a wider discussion is emerging over whether financial incentives are improving access to care — or reshaping medicine in ways that will ultimately disadvantage patients.
That dialogue is becoming increasingly relevant in autism treatment, one of the nation’s fastest-growing healthcare sectors.
A new report from the Private Equity Stakeholder Project (PESP), a nonprofit watchdog organization, argues that federal regulators should increase oversight not only of private equity buyouts but also of partnerships between nonprofit healthcare organizations and investor-backed companies.
The report identifies more than 500 joint ventures involving nonprofit hospitals, hospice organizations, rural healthcare systems and other providers that share ownership or operations with private equity-backed firms.
Many of these arrangements transpired before national regulations could catch up, creating monetary motives that differ from the charitable missions nonprofit healthcare organizations are legally required to uphold, the report contends.
“Much of the federal guidance governing nonprofit-for-profit joint ventures was written long before private equity became a dominant force in healthcare,” Matt Parr, communications director for PESP, told The Defender. “That raises important questions about whether today’s oversight matches today’s business models.”
The report argues for stronger transparency requirements and updated federal regulations to ensure that public resources continue supporting patient care rather than profiteering.
Will private equity model erase market competition?
Private equity has become one of the most influential forces in U.S. healthcare.
Researchers at New York University estimated that investment firms have completed more than $1 trillion in debt-financed healthcare transactions during the past decade, financing acquisitions involving hospitals, physician practices, nursing homes, hospice providers, emergency medicine groups and specialty healthcare services.
Proponents argue that outside investment provides struggling healthcare organizations with the financial backing needed to modernize facilities, expand services, improve technology and recruit staff.
Anthony Lo Sasso, Ph.D., a health economist at the University of Wisconsin-Madison, believes broader healthcare problems — including consolidation, reimbursement pressures and rising costs — affect nonprofit and for-profit organizations alike. Additional investment money, he said, can allow providers to hire staff, modernize facilities and improve operations.
“What we’re talking about here is investment capital that the provider can turn around and invest in patient care, invest in operations, invest in more and better staffing,” Lo Sasso told The Guardian.
Those who oppose investor-owned healthcare believe the model prioritizes financial returns over patient care by emphasizing cost reductions, increasing productivity expectations and consolidating markets.
Toby Rogers, Ph.D., a Brownstone Institute fellow and author of the uTobian Substack page, said creating additional financial enticements within the healthcare structure could lead to the removal of market-based competition, replacing it with “monopolies.”
Rogers believes this could transform patient care for the worse.
“Prices go up. Quality of service goes down,” he said. “Choice, innovation and care are replaced with slick marketing and what are called ‘economic rents’ — charges over and above the fair market price because private equity now controls a limited resource.”
Wasteful spending costs U.S. healthcare system $760 billion to $935 billion
The broader debate over healthcare investment comes as waste remains a major driver of U.S. healthcare spending.
A comprehensive review published in the Journal of the American Medical Association (JAMA) estimated in 2019 that unnecessary spending costs the U.S. healthcare system between $760 billion and $935 billion annually, which is roughly one-quarter of all healthcare expenditures.
The largest sources of waste included administrative complexity, pricing failures, unnecessary or low-value care, failures in care delivery and coordination, and fraud and abuse.
The researchers concluded that interventions already shown to improve efficiency could save between $191 billion and $286 billion each year, even without accounting for potential reductions in administrative complexity.
“Implementation of effective measures to eliminate waste represents an opportunity to reduce the continued increases in US health care expenditures,” the authors wrote.
The findings underscore why policymakers have increasingly scrutinized ownership models, reimbursement systems and financial incentives across healthcare.
They also illustrate broader economic pressures steering efforts to enhance efficiency while ensuring that healthcare spending translates into high-quality patient care.
Autism therapy becomes private equity investment target
Nowhere is that debate more visible than in autism services.
Applied Behavior Analysis (ABA), widely used to help children with autism develop communication, behavioral and daily skills, has experienced explosive growth during the past decade.
Several factors have fueled expansion.
Critically, autism diagnoses have continued rising nationwide.
Between 2011 and 2022, the prevalence of autism among U.S. children increased from 1 in 435 (0.23%) to 1 in 159 (0.63%), with the greatest increase from the 5-8 age group.
Researchers said the surge, combined with state and federal insurance mandates requiring autism coverage, powered demand for ABA services and created a flourishing market for private equity investment.
The result has been a fragmented environment consisting largely of independently owned clinics.
For private equity firms, such fragmented industries often represent attractive acquisition opportunities. Rather than purchasing one large corporation, investors frequently employ a “platform acquisition” strategy by buying one established provider before acquiring dozens of regional practices and combining them into a national organization.
The strategy allows centralized recruiting, billing, insurance contracting, compliance and administrative operations while expanding the firm’s reach.
Researchers at Brown University School of Public Health found that private equity firms acquired more than 500 autism therapy centers across America over the past decade. Nearly 80% of acquisitions occurred between 2018 and 2022, underscoring the industry’s rapid expansion into the autism sector.
The study identified 574 private equity-owned autism centers in 42 states as of 2024, with the largest concentrations in California, Texas, Colorado, Illinois and Florida.
Lead author Yashaswini Singh, Ph.D., said the findings demonstrate that private equity has entered “yet another segment of health care.” Singh noted that autism treatment presents unique policy questions because it primarily serves children, many of whom receive Medicaid-funded services.
Singh told The Defender private equity investments in autism treatment facilities have been “raising several issues,” which she referenced in her work.
Why autism care may be different
Unlike many medical specialties involving brief clinical encounters, autism therapy often depends upon long-term relationships between children and therapists.
Many children receive between 20 and 40 hours of behavioral therapy each week over several years.
Parents and clinicians frequently emphasize that consistency among therapists, registered behavior technicians and supervising Board Certified Behavior Analysts plays a critical role in maintaining treatment progress.
The autism workforce, however, has long experienced high turnover due to relatively modest wages, emotionally demanding work and burnout.
The high turnover can disrupt the progress of treatment.
Critics warn about financial incentives
Advocates urging greater monitoring say investor ownership can create competing priorities.
Parr said private equity firms have “rapidly expanded into autism therapy services” while operating under financial incentives that prioritize rapid growth.
Because Medicaid finances much of autism treatment, he said transparency is needed to ensure taxpayer dollars primarily support patient care.
“The goal shouldn’t be to limit access to autism therapy or discourage investment in care,” Parr said. “The priority should be making sure public Medicaid dollars are supporting high-quality care for children and families.”
PESP particularly recommends stronger ownership disclosure requirements, continued audits, facility-level oversight and policies directing more Medicaid funding toward frontline clinical care.
Others believe private equity could impede medical progress.
John Gilmore, executive director of the Autism Action Network, said the goal for many of these private equity firms may no longer be effective treatment but satisfying their bottom lines.
“For them, a cheap and easy cure for autism would be an economic disaster,” he said. “I am not sure we want powerful people to have those incentives.”
Gilmore said the National Institutes of Health (NIH) and Centers for Disease Control and Prevention (CDC) should focus on investments in autism studies.
“The best alternative to these centers would be for the NIH and the CDC to get serious and make the investments necessary to find the causes of autism, identify the biological pathways and develop treatments and possible prevention,” he said.
Financial adviser Chris Tobe, whose daughter has autism, believes taxpayers should be informed directly about where their money is going — as a central policy objective, regardless of ownership structure.
“The biggest concern is that most autism services are ultimately funded by taxpayers through federal and state programs such as Medicaid,” Tobe said.
He said providers receiving taxpayer funding should publicly disclose how revenues are allocated, including spending on executive compensation, debt payments, management fees, investor distributions and direct patient care.
“As a parent,” he said, “success should be measured by better care, improved outcomes and expanded access.”
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How do private equity takeovers affect patient care?
Research examining private equity ownership across healthcare has produced mixed results.
A 2023 study published in JAMA found that hospitals acquired by private equity firms experienced increases in several hospital-acquired conditions — including patient falls and bloodstream infections — compared with similar hospitals that were not acquired.
Researchers analyzed more than 4.8 million Medicare hospitalizations between 2009 and 2019, comparing 51 hospitals acquired by private equity firms with 259 similar hospitals that remained independently owned.
The study found that private equity acquisition was associated with a 25.4% increase in hospital-acquired conditions, including a 27.3% rise in patient falls and a 37.7% increase in central line-associated bloodstream infections.
Researchers also observed that surgical site infections doubled after acquisition, although the smaller number of surgical cases limited the statistical precision of that finding.
“Private equity acquisition was associated with increased hospital-acquired adverse events,” the authors concluded, adding that the findings “heighten concerns about the implications of private equity on health care delivery.”
A 2024 narrative review published in the Journal of Multidisciplinary Healthcare showed mixed results.
Analyzing peer-reviewed U.S. studies from 2009 through 2022, researchers found that consolidation of physician practices — whether through hospitals, large health systems or private equity firms — has been associated with both benefits and drawbacks.
Reported benefits included greater financial stability, stronger negotiating leverage with insurers and improved access to administrative resources, technology and capital. At the same time, studies consistently cited concerns over reduced physician autonomy, higher healthcare costs and increasing market concentration.
“It is unclear if quality of care is affected by this trend,” the authors wrote, noting that existing research found “risks and benefits.”
In 2024, the Senate Budget Committee released a bipartisan report, Profits Over Patients, examining several private equity-backed healthcare companies and questioning whether financial incentives had, in some cases, conflicted with patient care.
The report called for stronger transparency and accountability surrounding healthcare ownership.
Tax guidelines should change, says watchdog organization
The latest policy reporting makes clear the need to update healthcare industry tax laws, according to advocates.
PESP argues nonprofit hospitals increasingly partner with investor-backed companies through joint ventures that allow nonprofit organizations to retain tax-exempt status while sharing ownership with for-profit entities.
Current Internal Revenue Service guidance governing those partnerships largely dates to rulings issued in 1998 and 2004 — well before private equity became a dominant healthcare investor.
“Healthcare business models don’t stand still, and oversight frameworks shouldn’t either,” Parr said.
A request to the American Hospital Association for comment about private equity in healthcare, tax guidelines and autism treatment centers went unanswered.
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