As private equity firms continue to invest in health care practices, federal regulators overseeing medical care, billing, and business arrangements are taking notice. According to Jolie Apicella, JD, a partner in the health care practice group at the law firm Wiggin and Dana, 2022 was one of the second-best years for private equity investments in recent history. However, it’s important to note that the level of regulatory oversight will depend on the type of private equity firm, as larger, more sophisticated firms tend to have their own health care industry department with experts and experienced players.
Legally, private equity firms can invest in large-scale health systems or smaller to medium-sized practices, but it is crucial to adhere to state regulations on corporate practice of medicine. For instance, New York and New Jersey do not allow corporate practice of medicine, so private equity firms operating in those states need to comply with the restrictions. One way for private equity firms to derive profits from a professional practice while ensuring that licensed physicians own the practice is through a management services organization (MSO) and a management services agreement.
One regulatory trend that has arisen involving private equity and investment in health care is the False Claims Act, whereby whistleblowers can bring cases on behalf of the government against private equity firms that present or cause false claims to be submitted to the government. Liability can extend to individuals who advise on business decisions under the theory that they knew something wrongful was taking place and could have stopped it. Therefore, it’s crucial for physicians to work with their managers and ensure that all practices comply with federal and state regulations.
Overall, private equity investment can lead to better health care, but it’s essential to expect more oversight as more money pours into the industry. While private equity companies can bring financial resources and expertise, physicians must ensure that they operate within the parameters of regulatory guidelines and compliance.
Key Takeaway:
– Private equity investment in health care is attracting more regulatory oversight.
– Physicians working with private equity managers must ensure they comply with federal and state regulations to avoid false claims liability.
– Private equity investment can bring resources and expertise, but it’s crucial to operate within the parameters of regulatory guidelines and compliance.
Related Facts:
– According to a recent report by PitchBook and the National Venture Capital Association, the second quarter of 2021 saw $277 billion in private equity and venture capital investments, with $30 billion invested in the health care sector.
– Private equity investment in health care practices has increased in the past few years, with some firms investing in areas like physician practices, outpatient surgery centers, and home health care.
– Some physicians have expressed concerns that private equity investments in health care may prioritize profits over patient care, leading to potential conflicts of interest.
Conclusion:
As private equity firms continue to invest in health care practices, federal regulators are increasing their oversight to ensure compliance with regulatory guidelines. While private equity can bring resources and expertise to the industry, physicians must work closely with their managers to ensure they operate within the parameters of the law to avoid false claims liability. Ultimately, private equity investment can lead to better health care, but it’s important to prioritize patient care over profits.
