The Impact of Private Equity Firms on Australian Health Care: An Analysis

Private equity firms are making significant moves in the Australian private health care sector, with a recent analysis showing a growing trend of acquisitions in the industry. Victoria Berquist’s research, published in the MJA, reveals that private equity activity in health care has surged over the past fifteen years, totaling $4.5 billion in acquisitions in 2022 alone.

The study focused on private equity purchases of Australian companies providing hospital services, clinics, and specialized medical services like imaging and in vitro fertilization. While most clinic sales involved general practices, private equity acquisitions also extended to ophthalmology, oncology, radiology, and cardio-respiratory clinics. Berquist estimates that nearly 3% of all Australian general practices have changed hands to private equity owners since 2017.

Despite the significant findings, the analysis may underestimate the full extent of private equity involvement in Australian health care, as many transactions are not publicly disclosed. This raises concerns about the potential impact of private equity ownership on health care providers, as previous research from the United States has shown mixed results on health outcomes, staffing, and costs.

The increasing financialization of health care and the rise of foreign ownership in the sector also pose challenges for policymakers, as foreign investors may seek compensation for policy reforms under international trade agreements. Additionally, the shift towards corporatized and financially owned general practices challenges the traditional view of independent small businesses in the industry.

As private equity ownership becomes more prevalent in the health care sector, doctors and specialists are advised to understand the implications of selling their practices to private equity firms. While selling to private equity may result in capital payments, it could also lead to a decrease in income over time. Physicians are encouraged to explore alternative ownership models, such as non-profit organizations or public employment, to make informed decisions about their professional futures.

Overall, the rise of private equity in Australian health care raises important questions about the impact on health outcomes, ownership structures, and the future of the industry. Policymakers, health care providers, and investors alike must consider the implications of private equity ownership in shaping the future of health care in Australia.