Betting On Health Care: Evaluating Private Equity Activity In Addiction Treatment
substance use disorder
Business Law, Public Responsibility, and Ethics
Finance and Financial Management
Substance Abuse and Addiction
Over the past few decades, private equity has become a growing force in health care, with the number of private equity deals in health care increasing tenfold from 2000 to 2018. Behavioral health has seen significant private equity investment, with addiction treatment facilities being a particular target due to the high reimbursement rates and growing demand for services. Private equity investment in this sector can infuse facilities with capital and improve operational efficiencies. However, the profit motive of private equity firms can lead to strategies that prioritize revenue over quality of care, patient choice, and patient safety, perpetuating low-value care. This paper uses PitchBook data and statistical analysis to map private equity acquisitions of addiction treatment facilities across the U.S. and compare them to overdose and social determinants of health data. Understanding the scope of private equity activity in addiction treatment can inform appropriate government intervention to ensure patients receive quality care.