private equity, investments,

private equity, investment,

Over the past 10 years, private equity firms have increasingly invested in urgent care — capitalizing on an industry that surged in growth as patients seek alternatives to bureaucratic primary care and expensive emergency room visits.

But the expanding presence of private capital in urgent care and industry consolidation are raising concerns about the quality and affordability of care, according to a recent report published by the Private Equity Stakeholder Project. PESP is a non-profit organization with a mission to “identify, engage and connect stakeholders affected by private equity.”

The report says the number of urgent care centers in the US will grow to more than 10,400 locations in 2021, marking a 63% increase over the previous 7-year period. A key feature of emergency care is convenience, according to Eileen O’Grady, head of research and campaigns at PESP. The industry is growing because urgent care clinics are open with more flexible hours than traditional doctor’s offices and are generally faster and less expensive than emergency room visits. O’Grady pointed out that the pandemic has further shown the benefits of urgent care, as clinics have played a critical role in increasing access to testing and vaccines.

Although the presence of private equity in the industry is increasing, private equity ownership still comprises a relatively small portion of urgent care providers. As of 2019, 40% of urgent care facilities were at least partially owned by hospitals, 35% by insurers, and 6% from 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, director of business advisory services at accounting firm Kaufman Rossin.

The urgent care industry needs to be wary of growing private ownership, the report argues.

“The private equity business model, which is geared toward huge returns over short time horizons, has shown that it prioritizes 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’ve seen wealth extraction by cutting staff, imposing expensive procedures and divesting assets from providers.”

The report found 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 main lobbying group. The group low recovery rates quoted as the reason few urgent care centers accept Medicaid.

Medicaid enrollees accounted for 16 percent of all reported patient visits in 2015, according to the report. In addition, federal law prohibiting surprise medical billing largely does not cover urgent care, meaning patients are not protected from surprise bills at urgent care facilities.

For O’Grady, the lack of regulation in the urgent care sector is also troubling. Without adequate oversight, it is difficult to ensure that urgent care centers maintain 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 care system.

O’Grady also called on the larger healthcare community to pay attention to these troubling ownership trends in the urgent care industry.

“Urgent care plays an increasingly important role in our health care system, filling gaps in access to health care by providing flexible and generally accessible care,” she said. “However, the dramatic growth of Wall Street investment in the industry, combined with the lack of regulation, deserves careful consideration. If the track record of private equity investing in health care is any guide to what to expect in emergency care, health care providers and advocates should be wary of the influx of private investors into the sector.”

Photo: Ta Nu, Getty Images

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