In the classic 1987 Oliver Stone film, “Wall Street”, corporate raider and all-around reptilian guy Gordon Gekko, played by Michael Douglas, intones, “The point is, ladies and gentleman, that greed—for lack of a better word—is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.”

Unfortunately, greed can also drain valuable resources until they’re all used up, and the greedy has to move on to the next victim—er, I mean, “transaction.” 

When a union of the Federal Trade Commission, the U.S. Department of Justice’s Antitrust Division, and the Department of Health and Human Services recently announced it was taking a hard look at consolidation in health care, including that orchestrated by private equity, it made you think that maybe greed had, once again, gone too far.

Consolidation in health care in general, and purchases by private equity in particular, have the potential to yield benefits to both the purchaser and the purchased, including: More capital to work with; a lot of business acumen that a health facility might not have; and bargaining power thanks to economies of scale. If done right, it could work out for everybody.

Unfortunately, when money is dangled in front of them, often people don’t do things right. Rather than take a reasonable profit, maybe some private equity concerns or corporate entities pushed it too far. They pushed and pushed to squeeze every last penny out of a hospital system or practice until they started to damage them, and the purported goal of the enterprise, patient care, suffered.

According to an analysis of the government’s current action, some of these oversteps that the government is concerned about include:

• collecting unjustified “monitoring fees”;

• selling hospital-owned real estate that the hospital must then lease back;

• saddling health-care assets with debt; and

• rolling up assets in serial acquisitions to achieve market leverage in order to “command higher prices,” “exploit” various payment loopholes, and engage in other forms of financial engineering.¹

This is on top of the situation surrounding Steward Health Care, which apparently incurred so much debt acquiring more hospitals that the care at existing facilities may have suffered (and it’s now facing possible bankruptcy and the shuttering of hospitals),² as well as the numerous physician horror stories on the open comments section of the FTC’s website regarding consolidation.

I’m sure we all hope that this apparent movement toward added scrutiny of consolidation will nudge these business entities back toward the straight-and-narrow path, where they can make a profit but physicians and patients can also feel good about the care they give and receive. 

Sorry, Gordon, it turns out greed is not always good.

— Walter Bethke
Editor in Chief

^{1. Robson K, Powell W, Rooney W, et al.FTC, DOJ, and HHS launch cross-government inquiry on private equity investment in healthcare. https://www.willkie.com/-/media/files/publications/2024/03/ftc_doj_and_hhs_launch_cross_government_inquiry_on_private_equity_investment_in_healthcare.pdf. Accessed May 21, 2024.}

^{2. Harvard School of Public Health. Unpacking Massachusetts’ Steward health system crisis.}

^{https://www.hsph.harvard.edu/news/hsph-in-the-news/unpacking-massachusetts-steward-health-system-crisis/. Accessed May 21, 2024.}