In a recent issue of The New Yorker, physician Dhruv Khullar writes about what happened to the practice of medicine when private equity began buying up hospitals and group practices. The result of privatization of healthcare was not surprising: the desire for profit became more important that the drive to improve patients’ health. Private equity was very successful in squeezing handsome profits out of community hospitals, but all too often those hospitals went bankrupt, leaving the communities without a hospital. Dr. Khullar says we are now in “the Gilded Age” of medicine, where wealth and corporate power are in charge.
Dr. Khullar is a physician and associate professor of health policy and economics at Weill Cornell Medical College.
Dr. Khullar wrote:
In 2010, a private-equity firm called Cerberus Capital Management, which is named for the three-headed dog that is said to guard the underworld, bought six Catholic hospitals in Massachusetts and christened the chain Steward Health Care. The state’s attorney general blessed the deal on multiple conditions, including that, during a five-year review period, the hospitals stayed open and their workers stayed employed. A few months after the period ended, however, Steward started selling the land on which the hospitals stood. A $1.25-billion-dollar deal, in 2016, helped to finance more acquisitions. Many facilities, asked to pay rent on land they’d previously owned, struggled.
According to a recent report published by Massachusetts Senator Ed Markey’s office, which covers the period between 2017 and 2024, some Steward facilities had to forgo key investments in staffing, surgical equipment, elevator repairs, and even clean linens. Patients increasingly languished in emergency rooms; many left without receiving care; and mortality rates for common conditions climbed sharply. (Steward has argued that its death rates were better than expected, given the underlying health status of the patients it cared for.) A hospital in Florida developed a bat infestation, and another, in Texas, was cited for placing potentially suicidal patients in rooms with materials with which they could hang themselves. Employees at Steward’s Carney Hospital, in Massachusetts, began calling their workplace “Carnage” hospital. (Cerberus’s ownership ended in 2020, and the firm claims that the quality issues at Steward are “overwhelmingly related to the post-Cerberus ownership period.”)
In May, Steward filed for bankruptcy. It has closed two hospitals and plans to sell thirty-one others. Steward’s C.E.O., Ralph de la Torre, who in 2011 purchased a forty-million-dollar superyacht, was subpoenaed by a Senate committee but failed to show up; he was held in contempt of Congress and resigned from his position. (De la Torre, in turn, sued the committee for violating his right against self-incrimination.) Nonetheless, Cerberus realized a profit of seven hundred and ninety million dollars from its investment in Steward. Meanwhile, in some places in the U.S., private-equity firms now own more than half of all medical practices within certain specialties. “We are being picked clean by private equity,” a New Jersey-based radiologist said at a recent meeting of the American Medical Association. “There are people who don’t know where their next paycheck is even going to come from because their groups have been flipped so often.”
2024 was arguably the year that the mortal dangers of corporate medicine finally became undeniable and inescapable. A study published in JAMA found that, after hospitals were acquired by private-equity firms, Medicare patients were more likely to suffer falls and contract bloodstream infections; another study found that if private equity acquired a nursing home its residents became eleven per cent more likely to die. Although private-equity firms often argue that they infuse hospitals with capital, a recent analysis found that hospital assets tend to decrease after acquisition. Yet P.E. now oversees nearly a third of staffing in U.S. emergency departments and owns more than four hundred and fifty hospitals. In some of them, patients were “forced to sleep in hallways, and doctors who spoke out were threatened with termination,” according to Jonathan Jones, a former president of the American Academy of Emergency Medicine.
Erin Fuse Brown, a professor at the Brown University School of Public Health, told me that private-equity firms have learned that they “don’t have to make things better or make them more efficient. You can just change one small thing and make a ton more money.” They are hardly the only corporations to learn this lesson. Increasingly, health insurers, private hospitals, and even nonprofits are behaving as though they aim first to extract revenue, and only second to care for people. Patients often are viewed less as humans in need of care than consumers who generate profit.
In 1873, Mark Twain co-wrote the novel “The Gilded Age: A Tale of Today,” which satirized an era that was marked by inequality, greed, and moral decay but was painted in a veneer of abundance and progress. Industrialists made fortunes in oil, steel, and shipping even as millions suffered poverty and exploitation. Today, health care is where the money is. New technologies and treatments sustain the impression that patients have never been healthier, but corporations and conglomerates wield immense power at the expense of the people they’re meant to serve. Welcome to the Gilded Age of medicine.
In recent years, health-care corporations have embraced an approach that can only be described as gamification. In the U.S., all seniors over sixty-five are entitled to health insurance through Medicare, and, for several decades, private companies have offered plans through programs such as Medicare Advantage. The government pays insurance companies a fixed sum based partly on how sick those patients are. The sicker the patients, the bigger the potential payments. But who’s to say, really, how sick a patient is? Let the games begin.
This year, the health-news site STAT revealed that UnitedHealth, the country’s largest private insurer, had set up dashboards for practices to compete on how many conditions they could diagnose in patients. Doctors who completed the most appointments with seniors in Medicare Advantage were eligible for ten-thousand-dollar bonuses, and patients were offered seventy-five-dollar gift cards for getting checkups at which their medical histories could be recorded. At the height of the covid-19 pandemic, an e-mail sent to one practice told clinicians that documenting chronic illnesses was the “#1 priority.”
Insurance companies have even started to scour medical records for possible diagnoses, and to send nurses to patients’ homes to perform “health-risk assessments.” These strategies rack up so many additional diagnoses that, in 2023 alone, the federal government made $7.5 billion in “overpayments” to insurers, according to the U.S. Office of the Inspector General. Insurers are “pouring tremendous resources into developing the capacity to code patients in a way that nets more money from Medicare,” Donald Berwick, a former head of the Center for Medicare & Medicaid Services, told me. “That’s taxpayer money being siphoned away from people who need it.”
Berwick said that his own physician’s practice had recently been acquired by UnitedHealth. One day, he asked his doctor, “Anything different now?”
“Two things,” the doctor replied. “I have to see more patients each day. And my patients have new diagnoses that I didn’t put there.” Many patients with atrial fibrillation, for example, were now coded as having another condition known as “hypercoagulable state”—which was technically accurate, but didn’t change patients’ care in any way. It did, however, generate higher payments from Medicare. Ask not what your insurer can do for you—ask how much revenue you can generate for your insurer.
The insurance companies in Medicare Advantage tend to argue that they’re simply recording diagnoses, not making them up; that they offer vision and dental benefits that traditional Medicare doesn’t offer; and that they rein in unnecessary care, such as by requiring prior authorization for certain tests and procedures. But according to the Medicare Payment Advisory Commission, a nonpartisan agency that counsels Congress, private Medicare Advantage plans will cost the federal government eighty billion dollars more per year than if those patients had been in the traditional Medicare program. “You might as well flush most of that eighty billion dollars down the toilet,” Berwick told me.
On December 4th, after I drafted this piece, Brian Thompson, the C.E.O. of UnitedHealthcare, was fatally shot in midtown Manhattan. In the days that followed, the public response was not just one of shock but also of frustration and even rage against the health-insurance industry. Someone posted in a subreddit for nurses, “Honestly, I’m not wishing anyone harm, but when you’ve spent so much time and made so much money by increasing the suffering of the humanity around you, it’s hard for me to summon empathy that you died.” The comedian Bill Burr compared C.E.O.s like Thompson to gangsters. “It’s a dirty game,” he said. “Health care—dirty game.” I was saddened by the callousness of these comments. Thompson had become a symbol of a broken system; people who devalued his life, it seemed to me, were engaging in a version of the dehumanizing behavior that they found objectionable within the health-care industry.
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