Private equity has rapidly enlarged its presence in the health care sector, expanding its investment targets from hospitals and nursing facilities to physician practices. The incursion of private equity is the latest manifestation of a long trend toward the corporatization and financialization of medicine. Private equity pools investments from large private investors to buy controlling stakes in companies through leveraged buyouts or similar arrangements that use the companies' own assets to finance debt. These investors seek to earn handsome profits by rapidly increasing revenues before selling off the investment. Private equity's incursion into health care is especially concerning. The drive for quick revenue generation threatens to increase costs, lower health care quality, and contribute to physician burnout and moral distress. These harms stem from market consolidation, overutilization and upcoding, constraints on physicians' clinical autonomy, and compromises in patient care. Policymakers attempting to counter these threats can barely keep up. Like a cloud of locusts, private equity moves so quickly that by the time lawmakers become aware of the problem and researchers study the effects, private equity has moved on to other investment targets. While it remains unclear whether private equity investment is fundamentally more threatening to health policy than other forms of acquisition and financial investment- whether by publicly traded companies, conglomerate health systems, or health insurers- private equity presents a heightened threat of commercialization. Even if private equity is not uniquely harmful, it is extremely adept at identifying and exploiting market failures and payment loopholes. The emphasis on short-term returns and exit, the heavy reliance on debt, and the insulation from professional and ethical norms make private equity investors more avid to exploit revenue opportunities than institutional repeat players. Thus, this Article's central claim is that the influx of private equity into health care poses sufficient risks to warrant an immediate legal and policy response. Public policy should primarily target market failures and payment loopholes and only secondarily curb private equity investment per se. The good news is that we already have many tools under federal and state law with the potential to address the harms of commercialization. These can be used or sharpened to address the particular concerns raised by private equity's incursion into physician markets. Key tools include antitrust oversight, fraud and abuse enforcement, and state laws regulating the corporate practice of medicine and the terms of physician employment. In some instances, legislative or regulatory action may be needed to adapt existing laws. In other instances, new laws may be needed to close payment loopholes or correct market distortions. A leading example is the recent No Surprises Act, which curtails surprise outof -network medical billing. While the Article lays out a roadmap for additional legal and policy actions to protect the health system from the acute risks of private equity, these are patches rather than systemic solutions. If these patches fail to stave off the incessant march toward commercialization of health care, we may see renewed calls to fundamentally rethink the market orientation of the U.S. health system.
