Health care is now the hot new investment. That’s not always good news for patients.

Private equity investors are gobbling up health care providers, including physician clinics, hospitals, hospices and even veterinary practices. A Kaiser Health News (KHN) investigation finds this sometimes comes with expensive and even tragic consequences for patients.

In 2021 alone, according to one industry tracker, deep-pocketed investment firms poured more than $206 billion into more than 1,400 health care acquisitions. In the past decade, private equity investors have spent nearly $1 trillion on nearly 8,000 health care transactions.

Fund managers say they have the expertise to reduce waste and turn around inefficient businesses. The benefit, they say, is making more dollars available to finance new drugs and technologies to benefit patients.

However, a recent KHN report looked at some of the ways private equity firms are turning bigger profits at the expense of patients.

The report began with the tragic story of 2-year-old Zion Gastelum, who died days after dentists performed root canals and put crowns on six baby teeth at a clinic owned by private investors. His parents sued the clinic and the investment firm, claiming the procedure was needlessly done and keeping with the clinic’s strategy to maximize profits by treating children on Medicaid. Zion died of “brain damage caused by lack of oxygen,” according to the lawsuit.

Neither the clinic nor the investment firm offered comment to KHN. Reporters found that providers owned or managed by private equity firms have agreed to pay fines of more than $500 million since 2014 to settle at least 34 lawsuits filed under the False Claims Act, a federal law that punishes false billing submissions to the federal government. KHN also found that most of the time, the private equity firm owners escaped liability.

Laura Alexander, a former vice president of policy at the nonprofit American Antitrust Institute who  collaborated with health economics researchers at the  Petris Center, told KHN she is concerned about private equity’s growing dominance in some markets. “We’re still at the stage of understanding the scope of the problem,” Alexander said. “One thing is clear: Much more transparency and scrutiny of these deals is needed.”

Has your physician’s practice or local clinic recently changed owners? How has that affected the quality and cost of the care you’ve received? Share your story with Voices for Affordable Health.