Supporting the health of your healthcare system

Private equity funds and their healthcare portfolio companies must proactively engage in state and federal government affairs due to the escalating legislative landscape. With lawmakers contemplating legislation mandating approval for healthcare transactions, robust advocacy becomes essential to navigate evolving regulatory frameworks. The heightened focus on banning non-compete agreements for physicians and other key personnel amplifies the need for active involvement, as this directly impacts the operational strategies of healthcare entities within private equity portfolios. 

Additionally, as regulators intensify efforts to regulate consolidation in the healthcare arena, a strategic government affairs approach becomes a crucial tool for private equity funds to shape and influence policy decisions that could significantly impact their portfolio companies.  

The year 2023 has shown that payors, providers, and even government regulators remain fully focused on outcome-based arrangements that achieve value for all parties while lowering costs and improving care for patients. Government programs, such as Medicare and Medicaid, continue to test value-based care initiatives. Both governmental and commercial payors are looking specifically to share financial risk with healthcare providers. Increasingly, accountable care organizations and other provider organizations are accepting that risk, in the form of shared savings and losses, capitation payments, and the like. 

As a result, the healthcare industry needs to continue acclimating to the financial pressures in taking on this risk while ensuring that it has the tools to manage not only costs but also the care of their patient population. Providers must likewise be prepared for the increased regulatory scrutiny and expected payor audits associated with value-based care arrangements.