Hoovering up the cash

 I think I might have shown this before. It's spending on "healthcare," i.e. medical services and goods in the U.S., as a percent of GDP. It leveled off for a while after passage of the ACA, but it's going back up:

 

All that moolah isn't buying us better health though. We're spending twice as much as comparable countries and getting the least for it:

 

Naturally, all that cash is going mostly to one place: capitalists. Recent decades have seen one overarching trend: consolidation of the medical industry into fewer and larger entities.

•Horizontal consolidation: similar institutions merge into chains. Hospitals, primary care practices, nursing homes, dialysis clinics, ambulatory surgery centers . . .

•Vertical consolidation: various kinds of facilities are brought into the same firm, e.g. hospital chains buying physician practices or nursing homes, or private equity firms buying up medical facilities.

•Large health insurers and private equity firms have also been buying physician practices as an investment. Optum Health, a subsidiary of the giant conglomerate UnitedHealth Group, now employs 8.4% of all practicing physicians in the U.S. – 90,000.

•According to an analysis in The Economist, 45% of medical spending in the U.S. goes to just nine firms: insurers, drug distributors and pharmacy benefit managers.

•UnitedHealth had revenues of $324 billion in 2022, second only to Walmart, and is now America’s 12th most valuable company. CVS health has ¼ of all pharmacy sales.

•Two companies – DaVita and Fresenius – control 74% of the market for dialysis.

 

Then there's private equity.  Unlike the enormous publicly traded companies listed above, private equity firms operate largely in secret. They have no pretense to any mission other than making profit for their owners. They commonly seek short-term profit for their investors by strategically purchasing practices where they can gain market share and pricing power, cutting costs including reducing the physician workforce and requiring remaining staff to provide a higher volume of services, using their market power to raise prices, and favoring higher margin procedures. They typically take on debt, using the acquired property as collateral, putting it at risk for bankruptcy without any risk to the buyers. 

As of 2015, private equity companies owned 9% of skilled nursing facilities – SNFs, commonly called nursing homes. They probably own more today. According to a National Bureau of Economic Research report, patient mortality is 10% higher during stays and 90 days post-discharge at SNFs owned by private equity than at SNFs in general. Private equity acquisition of hospitals has been found to be associated with a 25.4% increase in adverse events compared with control hospitals, including a 27.3% increase in falls, a 37.7% increase in central-line infections, and a 100% increase in surgical site infections. 

More on what this is costing us, and why it's happening, to come.