Angela Humphreys Discusses Role of Private Equity Investment in the Healthcare Industry

January 8, 2021
ValueWalk

In an article for ValueWalk, Bass, Berry & Sims attorney Angela Humphreys authored an article detailing private equity’s continued interest in healthcare and the positive impact on care delivery private equity (PE) investment can have in the industry.

“Investment by private equity has exploded over the last decade,” Angela said, adding that investment activity even picked up in Q3 and Q4 of 2020 after being slowed by the pandemic, and it is poised to remain strong in 2021. With the rush of activity has come sharp criticism of PE’s role and impact on healthcare, including in the media and legislatures at the federal and state level, raising concerns that PE focus on streamlining businesses and profits might negatively affect the quality of care and research in healthcare. However, Angela clarifies the many positive transformations PE in healthcare often brings to bear, including the focus on enhanced patient care, quality outcomes, standardized protocols and improved compliance.

Having worked with numerous PE firms and their portfolio companies, Angela points to several common themes of the impact of PE investment on the healthcare delivery system, including:

  • A shift in patient care, where appropriate, from the inpatient hospital setting to the outpatient setting.
  • A new focus on the patient experience as central to the overall care delivery model.
  • Capital investment in technologies, care delivery models and ancillary services lines.
  • Implementation of standardized clinical protocols derived from best practices across all affiliated clinicians.
  • The addition of professional administrative staff and standardization of back-office functions.
  • Implementation of vendor contracting strategies, including strategies for contracting with managed care companies and other third-party payors.
  • Enhanced regulatory compliance, including a comprehensive compliance program, ongoing training and monitoring.

The benefits of PE in healthcare are supported by findings in the 2019 EY-Parthenon survey, in which 90% of surveyed physician practice leaders rated their experience under PE ownership as positive overall and 65% said the investment improved regulatory compliance. The American Medical Association’s (AMA) 2019 whitepaper on corporate investors acknowledged specific benefits, including access to capital for practice expenses and expansions, fewer administrative burdens and centralized resources for operational functions.

The full article, “The Role of Private Equity Investment in Healthcare,” was published by ValueWalk on January 7 and is available online.