By insuring millions more Americans, the ACA created a new, guaranteed government-backed revenue stream. This made healthcare an extremely attractive and low-risk target for private equity firms, accelerating the industry's financialization.
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When the government guaranteed student loans, it removed the risk for colleges. This allowed them to hike tuition prices unchecked, knowing students had access to funding. The resulting flood of graduates has also made a college degree less of a differentiator in the job market.
An astonishing 97.3% of all private sector job gains in 2025 occurred within the healthcare industry. This extreme concentration highlights a narrow and potentially fragile labor market, with net job losses seen across the private sector when healthcare is excluded.
Most consumers and even employees don't know their local hospital or retail store is PE-owned. This opacity shields PE executives from the public anger directed at more visible corporate leaders, allowing them to operate in the shadows.
Unlike its reputation, the healthcare sector faces substantial challenges from regulation, pricing pressure, and difficulties in passing on costs. This makes it a deceptively risky area for credit investors who must perform careful selection rather than treating it as a defensive play.
Contrary to the narrative that PE firms create leaner, more efficient companies, the data reveals a starkly different reality. The debt-loading and cost-cutting tactics inherent in the PE model dramatically increase a portfolio company's risk of failure.
Regulatory capture is not an abstract problem. It has tangible negative consequences for everyday consumers, such as the elimination of free checking accounts after the Dodd-Frank Act was passed, or rules preventing physicians from opening new hospitals, which stifles competition and drives up costs.
The detrimental impact of PE on medical practices has created a rare consensus among doctors. Physicians with widely divergent political views, including those for and against unions, are unanimous in identifying private equity as a destructive force.
The trend of companies staying private longer and raising huge late-stage rounds isn't just about VC exuberance. It's a direct consequence of a series of regulations (like Sarbanes-Oxley) that made going public extremely costly and onerous. As a result, the private capital markets evolved to fill the gap, fundamentally changing venture capital.
PE acquisitions in healthcare impose rigid, cost-cutting operational models that strip physicians of their professional autonomy. This transforms them into cogs in a machine, driving burnout and fueling unionization efforts among doctors.
Government subsidies within healthcare systems like the ACA create a perverse incentive for providers and insurers to inflate prices. This triggers a toxic flywheel: higher costs demand more subsidies, which in turn fuel further price hikes, making the underlying problem of affordability worse over time.
