HEALTHCARE CORPORATIZATION 

The increasing corporatization of the U.S. healthcare system—where private, investor-backed entities like Private Equity (PE) firms and large corporations prioritize shareholder profits over patient well-being—is a complex issue with profound trade-offs and significant risks.

Key Dynamics: Profits vs. Value

In healthcare, the alignment between profit and patient value is often broken:

• Benefits (The Upside): Corporatization can inject substantial capital into the system, funding new technologies and facilities. In areas like in vitro fertilization (IVF), where quality is easy to measure and patients pay directly, this has successfully led to economies of scale, potentially lowering costs or improving quality.

• Drawbacks (The Risk): The profit motive can lead companies to prioritize financial returns, especially where patients are vulnerable and quality is hard to measure (e.g., nursing homes). Examples include PE-owned nursing homes linked to lower quality of care and higher mortality rates.

Major Effects of Corporate Control

1. Reduced Competition and Higher Costs

Since 2008, nearly 1,000 hospital mergers have occurred, concentrating market power. This consolidation is directly linked to patient cost increases (up to 65%) and wage stagnation for healthcare workers. Corporate actions can also destabilize services, leading to hospital closures and reduced access for vulnerable communities.

2. Harmful Financial Tactics – Corporations employ sophisticated financial structures that prioritize profit extraction:

• In Nursing Homes: PE firms and Real Estate Investment Trusts (REITs) use sale–leaseback arrangements, where the care provider sells its building and then leases it back. This separates the real estate profit from the care provision, often preceding staffing cuts and lower quality of care.

• In Physician Practices: Corporate entities use Management Services Organizations (MSOs) to buy and aggregate practices, consolidating power and potentially pressuring doctors to prioritize profitable procedures over patient necessity.

The Policy Gap: Why Antitrust is Insufficient

Traditional antitrust law, which focuses on the consumer-welfare standard (primarily whether a merger raises prices), is inadequate for addressing healthcare corporatization because:

• It Misses Non-Price Harms: Harms like cuts to staffing or lower quality in fixed-reimbursement settings (like nursing homes with Medicare/Medicaid) are not captured by price-focused review.

• It Misses Financial Maneuvers: Sophisticated financial structures like sale-leasebacks and MSOs are used to maximize profits and consolidate power without relying on typical market power, allowing them to evade traditional regulatory scrutiny.

Solutions: Centering Health Outcomes

To recenter healthcare on patient well-being, regulators need complementary strategies that focus on health outcomes, not just shareholder value:

Some states are leading the way; for instance, Massachusetts House Bill 5159 (2025), enacted following the Steward Health Care collapse, effectively bans future hospital sale-leaseback arrangements involving REITs and significantly expands state oversight and disclosure requirements for corporate transactions.