Over the past 10 years, private equity firms have been increasingly investing in urgent care — capitalizing on an industry that has skyrocketed in growth as patients seek alternatives to bureaucratic primary care and expensive visits to the emergency room.
But private equity’s expanding presence in urgent care and the consolidation of the industry raise concerns about the quality and affordability of care, according to a recent report released by the Private Equity Stakeholder Project. PESP is a nonprofit with a mission to “identify, engage and connect stakeholders affected by private equity.”
The report said the number of urgent care centers in the U.S. grew to more than 10,400 locations in 2021, marking a 63% increase over the previous 7-year period. The main draw of urgent care is convenience, according to Eileen O’Grady, a research and campaign manager at PESP. The industry is growing because urgent care clinics are open during more flexible hours than traditional physicians’ offices and are generally faster and cheaper than emergency room visits. O’Grady pointed out the pandemic demonstrated the benefits of urgent care even further, as clinics served a critical role in boosting the accessibility of testing and vaccines.
Even though private equity’s presence in the industry is ramping up, private equity ownership still comprises a relatively small portion of urgent care providers. As of 2019, 40% of urgent care facilities were at least partly owned by hospitals, 35% by insurers and 6% by private equity firms. But the percentage of urgent care facilities owned by investors such as private equity groups is likely higher now, according to Ian Goldberger, principal of business consulting services at accounting firm Kaufman Rossin.
The urgent care industry should be wary about this increasing private equity ownership the report argued.
“The private equity business model, which targets outsized returns over short time horizons, has been shown to prioritize growth and profits over quality patient care,” O’Grady said. “In areas where private equity firms have been investing for years — such as nursing homes, hospitals and behavioral health — we have seen wealth extraction through cutting staff, pushing costly procedures and stripping out assets from providers.”
The report revealed that urgent care centers are less likely to treat Medicaid patients — a shortcoming that was acknowledged even by the Urgent Care Association, the industry’s primary lobby group. The group cited low reimbursement rates as the reason why few urgent care centers accept Medicaid.
Medicaid enrollees represented 16% of all reported patient visits in 2015, according to the report. Additionally, federal legislation banning surprise medical billing largely does not cover urgent care, meaning patients are not protected from surprise bills at urgent care facilities.
To O’Grady, the lack of regulation within the urgent care industry is also concerning. Without adequate oversight, it is difficult to ensure that urgent care centers are maintaining a high quality of care, fair billing practices, and equitable access to low-income and medically underserved communities. She said large urgent care chains should be subject to a similar level of oversight as any health system.
O’Grady also called for the greater healthcare community to pay attention to these worrisome ownership trends in the urgent care industry.
“Urgent care increasingly plays a critical role in our healthcare system, filling gaps in health access by providing flexible and usually affordable care,” she said. “However, the dramatic growth of Wall Street investment in the industry combined with a dearth of regulation merits scrutiny. If private equity’s track record in healthcare investing is a bellwether for what to expect in urgent care, healthcare providers and advocates should be wary of private equity investors’ incursion into the sector.”
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