Alabama is in a system-wide health care crisis. More than 417,000 Alabamians lack health insurance, yet our state refuses to expand Medicaid and close the coverage gap. Twenty-seven rural hospitals are at risk of closure, nineteen at immediate risk of closing. Only fifteen hospitals provide around-the-clock labor and delivery services, meaning mothers often have to drive hours to safely have a baby.
Yet while Alabama’s leaders continue to kick the can down the road, out-of-state private equity firms are moving in and presenting themselves as rescuers of our struggling health systems. Too often, these private equity firms are wolves in sheep’s clothing, cutting services, compromising the quality of care, and extracting profits, leaving Alabama’s most vulnerable communities to pay the price.
Private equity firms are designed to make a profit for their rich investors. These firms pool money from rich folks to buy struggling companies and make more money for rich investors. How do they make a profit off of a struggling hospital? They cut staff, services, locations, and raise prices, even if those decisions hurt patients and communities. And then when these health systems become more profitable, they sell them and leave whatever damage has been done in place.
Recent research shows that under private equity ownership, patients have been billed more, treated more, and treated worse, while investors collect the returns from abusing the healthcare system. Private equity firms have figured out that sick people are a dependable source of revenue, and they have built a business around getting more of it.
Cancer care is a favorite target of private equity. Roughly 10% of all oncology treatment in the country became affiliated with private equity between 2003 and 2022. When private equity takes over an oncology practice, Alabama cancer patients end up paying the price. Private equity-acquired oncology practices raised prices by 16.4%, the steepest increase of any specialty studied, with a 5.3% jump within a year of the acquisition. Sadly, patients of private equity-owned practices are having worse health outcomes too. In addition, studies shows lower care-quality scores and higher mortality and complication rates in cancer procedures at private equity-owned practices.
When my dad got sick, I needed help. I called home health services and found Help at Home, a company that provides home health services. I ended up not hiring them because their prices were far too high, but thousands of Alabama families did use their services. But in 2023, Help at Home, a private equity-owned company, announced overnight that it would not operate in Alabama. They laid off nearly 800 workers, leaving families in every county without critical care. But that’s what a private equity-owned health provider can do. If it doesn’t work in their interest, they leave, sell, or cut, not thinking about the ramifications for families.
Look, I’m no dummy; the strip-and-flip model- load a company with debt, sell off its real estate, cut workforce and hours, and raise prices is commonplace all across the economy. We all see the wreckage of an upside-down economy in our daily lives. When a restaurant or store fails, we lose our favorite place to eat or buy stuff. When a hospital or nursing home fails, people lose their lives.
There is no single solution to Alabama’s health care crisis. State leaders should expand Medicaid, invest in rural hospitals, protect labor and delivery services, and strengthen access to mental health and substance use treatment. But they must also stop welcoming every out-of-state investor as a savior simply because it arrives with enough money to purchase a struggling hospital or medical practice.
Health care is not an asset to be stripped, flipped, and abandoned. A hospital is not a restaurant whose closure merely leaves an eyesore of an empty building behind. It is where our kids are born, where our parents receive cancer treatment, and where our neighbors go when their lives are on the line. Alabama families deserve a health care system built to keep them alive and thriving, not to make out of state investors richer.
Jane Adams is a 9th generation Alabamian, health policy analyst and principal at Monte Sano Strategies. She previously worked at the American Cancer Society Cancer Action Network, Alabama Arise, and as a policy fellow at the U.S. Department of Health and Human Services.