Why Does Ownership Matter When It Comes to Delivery of Healthcare?

By David Bertone, PT, DPT, OCS

Most people do not consider who owns the medical practice they are attending but it may be time you do in order to ensure non-licensed owners are not impacting on the cost and quality of the healthcare you are receiving. Over the past 10+ years, there has been a rapid expansion of private equity wall street firms and non-licensed owners attempting to profit in healthcare businesses including physical therapy, dentistry, dermatology to name a few.

According to a 2024 article published in the Georgetown University Center of Health Insurance Reforms (CHIR), State and Federal Efforts to Improve Ownership Transparency, “the nature of ownership or control of doctors’ practices, hospitals, and other providers can have profound effects on price, use, quality, and access to care, yet it can be hard or impossible to know which entities own or control a health care provider.” Here in New Jersey, there has been an explosion of private equity (PE) money to purchase and expand very large multi-location medical practices that have created a competitive advantage when it comes to insurance negotiation or fees charged to you the patient. PE/Wall Street firms demand 20% growth in profit margins and in healthcare, that trend is dangerous because it impacts lives and recovery.

How do you achieve such large growth in profit margins when it comes to healthcare? You either raise prices, cut staff or see more patients. The last two options can be extremely dangerous since your healthcare provider will be stretched thin and possibly make errors or operate outside of regulatory guidelines. For instance, in physical therapy, Medicare requires patients to be seen for true one on one care, yet many PE owned firms or those owned by non-licensees, may require their physical therapists to see 4-5people at the same time. Clearly this pits the licensee against ownership and they have to make an ethical or regulatory decision to keep doing it and jeopardize their license to practice or choose the higher salaries over regulatory requirements.

What can be done to combat this problem? Consumers can begin asking; who owns the practice and not just who is providing the care. In addition, states can begin to enact transparency legislation. According to the Georgetown University CHIR, a few states like Indiana and Massachusetts have transparency in healthcare legislation that requires all owners of healthcare entities to be listed on a Department of Health website. This must be required in New Jersey so consumers can make informed decisions that may impact the quality of care they receive.

Another component of non-licensees owning healthcare practices is when it comes to malpractice claims or regulatory violations. Once again only the licensed healthcare provider can be held responsible even though ownership is forcing them into practice that jeopardizes patient care or contradicts state or federal law. These hidden owners or investors in medical practices can create patient policies or charge excessive fees but cannot be punished by regulatory agencies because they are not licensed and beholden to the rules.

Next time you consider a healthcare practice, ask the simple question. Are all the owners licensed and on-site? If not, consider the ramifications and choose a group that has only licensed owners. Hopefully our state and federal legislators will put laws in place to make healthcare ownership more transparent for all the right reasons.

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