Private Equity Firms Investing in Healthcare Sector - Is it Good?

Private Equity Firms Investing in Healthcare Sector - Is it Good?

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The healthcare industry has been an attractive destination for private equity firms. Hospitals, doctors, and other healthcare service providers have a lot of opportunities to enhance productivity and reduce cost, which can mean huge gains for private equity firms. Private investment in Indian health care has risen significantly over the past decade thanks to investors who have been keen on stepping into a large, swiftly growing, and recession-proof market with high returns.

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Private equity firms are investing heavily in everything from health technology startups to physician practices. While private venture capital is bringing reform to health care through new delivery models, technologies, and operational capabilities, there is another side to it on whether private equity investments in healthcare helps patients and their communities or not.

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These investments provide hospitals and other healthcare start-ups an alternative to gain capital and help them deal with administrative overhead that takes them away from the job they were taught to perform: providing care.

But, at least in some cases, the investors’ strategy appears to be to raise revenues by price-gouging patients when they are most vulnerable.

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However, profitable in the short run, private investor-supported firms that damage consumers are not likely to do well financially in the long term. Unlike many other sectors, health care is both highly regulated and highly susceptible to the reality or appearance of victimizing the sick and vulnerable. Consumer indignity leads quickly to government intervention.

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Investors will benefit most by answering the health care system’s group of questions and by adding true value to our health system — giving high-quality services at affordable prices and eradicating waste. Those that try to maximize their short-term profits by increasing costs without adding real healthcare benefits are likely to find that those strategies are unsustainable.

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