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Private Equity Firms in the Healthcare Industry Research Paper

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Introduction

The article “Private Equity Buyouts in Healthcare: Who Wins, Who Loses?” by Appelbaum and Batt (2020) explores the impact of private equity firms on the revenue cycle management (RCM) sector of the healthcare industry. According to the authors, private equity companies are progressively becoming critical actors in the healthcare business, notably in the RCM sector, which manages medical debt collections. Private equity groups have been buying RCM companies that utilize aggressive collection practices, like suing patients and garnishing salaries, to recover medical debt from patients. These techniques have resulted in widespread criticism and governmental scrutiny of the RCM industry. According to the authors, the engagement of private equity firms in the RCM industry has had a negative impact on patients, particularly those with minimal financial resources (Appelbaum & Batt, 2020). Private equity businesses have raised the already high prices of healthcare services, which can be especially difficult for people who are uninsured or underinsured.

Negative Impact of Private Equity Firms on the RCM Sector

Private equity firms have further worsened the RCM sector’s existing problematic practices, such as surprise medical billing and the use of unscrupulous debt collection methods. The authors propose that authorities take steps to limit private equity companies’ engagement in the RCM industry (Appelbaum & Batt, 2020). Policymakers may, for example, force RCM businesses to be more transparent and accountable, prohibit the use of abusive debt collection techniques, and mandate RCM companies to provide more extensive financial help programs for patients.

Limiting the Involvement of Private Equity Firms in the RCM Sector

Governments investigate alternate healthcare finance models, such as nonprofit or community-based healthcare systems. The authors point out that private equity companies’ participation in the RCM industry extends beyond debt collection (Appelbaum & Batt, 2020). Private equity companies have also been involved in combining small RCM providers, debt-loading them, and transforming them into enormous powerhouses with significant market dominance before departing with handsome gains. This policy has had a detrimental impact on patients by reducing competition, increasing expenses, and decreasing access to healthcare services, particularly in rural and disadvantaged regions.

Implications of Private Equity Firms in the Healthcare Industry

Policymakers should also consider measures to promote greater competition and diversity in the RCM sector, such as facilitating new provider entry and encouraging the development of alternative payment models that prioritize patient outcomes and affordability. The authors also discuss the possible implications of private equity companies’ engagement in the RCM industry on the more extensive healthcare system (Appelbaum & Batt, 2020). According to the authors, the profit-driven mentality of private equity companies may collide with the aim of providing patients with financial and high-quality healthcare services. Short-term financial benefits may be prioritized by private equity firms over long-term investments in healthcare infrastructure and patient care (Appelbaum & Batt, 2020). Moreover, private equity companies’ emphasis on cost-cutting strategies may result in personnel and resource reductions, which might jeopardize care quality and patient outcomes.

Conclusion

Finally, the authors contend that private equity companies’ engagement in the RCM sector of the healthcare business has harmed patients and communities. Governments should examine measures to limit private equity companies’ attention in the RCM industry, increase transparency and control, and encourage alternative healthcare funding and delivery models that prioritize patient outcomes and affordability. By doing so, governments may contribute to the long-term viability of healthcare services while also promoting better fairness and access to treatment for all patients.

Reference

Appelbaum, E., & Batt, R. (2020). Institute for New Economic Thinking Working Paper Series, 1–115. Web.

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IvyPanda. (2024, September 18). Private Equity Firms in the Healthcare Industry. https://ivypanda.com/essays/private-equity-firms-in-the-healthcare-industry/

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"Private Equity Firms in the Healthcare Industry." IvyPanda, 18 Sept. 2024, ivypanda.com/essays/private-equity-firms-in-the-healthcare-industry/.

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IvyPanda. (2024) 'Private Equity Firms in the Healthcare Industry'. 18 September.

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IvyPanda. 2024. "Private Equity Firms in the Healthcare Industry." September 18, 2024. https://ivypanda.com/essays/private-equity-firms-in-the-healthcare-industry/.

1. IvyPanda. "Private Equity Firms in the Healthcare Industry." September 18, 2024. https://ivypanda.com/essays/private-equity-firms-in-the-healthcare-industry/.


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IvyPanda. "Private Equity Firms in the Healthcare Industry." September 18, 2024. https://ivypanda.com/essays/private-equity-firms-in-the-healthcare-industry/.

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