Is Private Equity Good for Health? Regulation and Competition Policy Lessons from a Survey of the Evidence

The paper summarizes the evidence on regulatory and competition policy weaknesses in dealing with healthcare market failures associated with the entry of private equity (PE) investors in the sector. It also suggests reforms that would address some of the main issues. In that context, it contributes to the debate on how fairness and social concerns could be added more explicitly to the efficiency mandate of regulatory and competition agencies. This debate and related ones in the sector have emerged in view of the growing evidence on the risks of negative coverage, pricing and quality impacts due to the margin for cream-skimming allowed to PE firms to ease their entry in the sector. Although the evidence shows that the negative outcomes are not systematic, there are common and can be associated with the failure of current regulatory and competition policies and tools to protect jointly investors, medical and para-medical staff, patients and taxpayers. The case to internalize the insights of the global experience to reassess the design of current policies aiming at diversifying the financing sources in the health sector seems to be strong.