Key Billionaires and Their Healthcare Holdings
Several billionaires with influential political ties control these powerful firms. Stephen Schwarzman, with a net worth of $55.6 billion and the CEO of Blackstone, Inc., owns major healthcare firms like TeamHealth. Henry Kravis ($6.5 billion) and George Roberts ($12.2 billion), the founders of KKR, are heavily involved in acquisitions such as Envision Healthcare. David Rubenstein ($4 billion), the co-founder of The Carlyle Group, is known for investments in healthcare, including ManorCare nursing homes. Bill Gates ($106.6 billion) also has a significant presence through his foundation and healthcare investments. Warren Buffett ($148.3 billion), through Berkshire Hathaway, is a major investor in healthcare-related stocks.
The financialization of healthcare began in the early 2000s, with private equity firms targeting healthcare sectors like physician practices, hospitals, and nursing homes. They saw these as stable and profitable investments due to consistent demand and third-party reimbursements. In the first decade of the 21st century, private equity firms started acquiring smaller healthcare entities through leveraged buyouts. By the 2010s, investments in healthcare surged, with deals growing from $5 billion annually in 2000 to over $100 billion by 2018. Sectors like urgent care, primary care, and specialty practices became prime targets.
The Impact of the COVID-19 Pandemic
The COVID-19 pandemic further accelerated the trend. Healthcare providers faced financial strain, and private equity firms acquired distressed practices and hospitals. They consolidated market power while implementing aggressive cost-cutting measures. By 2023, private equity firms had spent $505 billion on healthcare acquisitions over five years, extracting profits through increased fees, reduced staffing, and operational consolidation.
Study on Nursing Homes
A 2021 study published in Health Affairs analyzed the impact of private equity ownership on nursing homes. It found that facilities acquired by private equity firms, like Blackstone and The Carlyle Group, experienced a decline in patient care quality and a 10 percent increase in mortality rates. These outcomes were attributed to reduced staffing, cuts in essential supplies, increased patient-to-staff ratios, and cost-cutting measures aimed at maximizing profits.
Acquisitions in Behavioral Health
Acquisitions in behavioral health have also led to increased costs for patients and cuts in essential services. Private equity now owns approximately 7 percent of addiction treatment facilities and over 6 percent of mental health clinics in the US. Essential but less profitable services, such as community-based mental health programs and addiction treatment, have been scaled back or discontinued.
The Broader Implications
The consolidation of healthcare into fewer, larger corporate entities by private equity gives finance capital unprecedented control over public health. This commodification undermines access to affordable care while enriching a narrow layer of investors. The restructuring of healthcare is not just a technical issue but a political one that requires organized action from workers to pursue public healthcare systems that prioritize human need over profit.
Political Ties and Influence
Both big business parties in the US are complicit in this process. Donald Trump appointed Robert F. Kennedy Jr., an anti-vaccine advocate, as Secretary of Health and Human Services. Other healthcare posts went to similar open enemies of public health. There is a clear intersection between the financialization of healthcare and politics, with the dismantling of public health infrastructure supported by both parties.
Blackstone has significant influence in both finance and politics. Schwarzman, a prominent Republican donor, has close relationships with politicians like Donald Trump and advised on financial policy during the Trump administration. Blackstone's investments in real estate and healthcare have been shaped by deregulation efforts supported by these political ties.
Apollo Global Management maintains deep ties with politicians, hiring former Republican Senator Pat Toomey and Harry Reid's Chief of Staff David Krone. These connections strengthen its position in healthcare, real estate, and finance sectors, facilitating corporate influence over public welfare.
KKR's Henry Kravis, a significant Republican donor, has advocated for policies that benefit private equity, including tax structures favoring carried interest.
The Military Sector Connection
The Carlyle Group, known for its close ties to Washington D.C., has employed former politicians like former President George H.W. Bush and former Secretary of Defense Frank Carlucci as advisers or partners. These connections have helped Carlyle secure lucrative defense contracts and investments in regulated industries.
The Role of Unions
In the context of the growing class struggle and healthcare industry strikes, the role of unions must be scrutinized. Unions have often facilitated the process of consolidation and cost-cutting measures under the guise of job security. For example, the Service Employees International Union (SEIU) has partnered with healthcare corporations to enforce “labor–management partnerships” that endorse cost-saving measures at the expense of workers.
During the COVID-19 pandemic, HCA Healthcare proposed wage and benefit cuts, and the SEIU facilitated the concessions. In some cases, the SEIU has supported the privatization or consolidation of public hospitals, arguing that it would protect jobs. The National Union of Healthcare Workers (NUHW) has agreed to contracts with minimal wage increases and failed to address understaffing issues.
The American Federation of State, County and Municipal Employees (AFSCME) has negotiated contracts with wage freezes and benefit reductions. The California Nurses Association/National Nurses United (CNA/NNU) is also known for collaborating with management, especially at Kaiser Permanente.
Union agreements have prioritized the financial viability of employers over the needs of workers, endorsing wage freezes, benefit cuts, and increased workloads. They have supported mergers, creating false illusions of job security through economies of scale while often leading to layoffs and the erosion of working conditions.
The defense of public health requires a fight against the union apparatus. Rank-and-file committees must be built to transfer power to healthcare workers and link up struggles across the world in a common fight against the financialization of the industry. Healthcare must be defended as a basic social right available to all based on need.
For the working class, gaining control of public health is a matter of life and death, as demonstrated by the COVID-19 pandemic. We need to remove the restraints imposed by the profit system and reorganize social healthcare on a scientific, rational, and humane basis.
Sign up for the WSWS Health Care Workers Newsletter!Economic Factors and Their Influence
Steven Reedy, Managing Director at First Citizens Bank, pointed out that inflation remains a real concern and he doesn't foresee a quick and substantial reduction. This sentiment was shared by other panelists, who anticipate a slower decline in interest rates than initially expected. The economic landscape continues to play a crucial role in shaping the industry's trajectory. 1: The continuous presence of inflation poses challenges for the healthcare real estate sector. It affects various aspects such as property valuations and borrowing costs. As inflation persists, it becomes necessary for industry players to adapt and find ways to navigate through these economic uncertainties. 2: The slower decline in interest rates also has implications for the sector. It may impact the affordability of financing for healthcare real estate projects. This requires careful consideration and strategic planning by investors and developers to ensure the sustainability of their operations.Silver Linings in the Sector
Roman Kupchynsky, Managing Principal at MedProperties Realty Advisors, LLC, brought some positive news. He stated, "From our viewpoint, we are in a good position. We have the capital available to deploy, and our lenders are willing to lend to us at a reasonable rate. This allows us to acquire properties at a more favorable cap rate than before, which is beneficial for our business." 1: The availability of capital and favorable lending terms provide opportunities for growth and expansion in the healthcare real estate sector. It enables companies like MedProperties to identify and acquire properties that meet their investment criteria, thereby strengthening their portfolio. 2: The ability to secure financing at decent rates gives confidence to investors and developers. It allows them to move forward with their projects and take advantage of market conditions. This, in turn, contributes to the overall stability and growth of the sector.The Financing Landscape
Buehner expressed optimism about lending, stating, "I am optimistic on lending, and it is improving and will continue to do so in 2025." Reedy added, "We are committed and focused on serving this market. We are deploying capital in a consistent manner and don't foresee any major changes in that regard." 1: The improving lending environment provides a boost to the healthcare real estate sector. It allows for increased investment and development activities, which can lead to the creation of new healthcare facilities and the improvement of existing ones. 2: The consistent deployment of capital by institutions like First Citizens Bank ensures a steady flow of funds into the sector. This helps to meet the ongoing demand for healthcare real estate and supports the growth of the industry.Challenges and Opportunities
Christopher Flouhouse, EVP & Chief Investment Officer at Sila Realty Trust, Inc., revealed that his company is "borrowing around 6%" and is "looking to build our pipeline in 2025, 2026 and beyond." He also mentioned that if rates remain at a higher level for a longer period and there are sellers with capital structure issues, it presents an opportunity for the company. 1: The higher interest rate environment creates challenges for some market participants, but it also opens up opportunities for those with a strategic approach. Companies like Sila Realty Trust can take advantage of distressed situations and acquire properties at attractive prices. 2: The focus on building a pipeline in the coming years indicates the long-term outlook of the healthcare real estate sector. It shows that despite the current uncertainties, industry leaders are confident in its future growth and are actively preparing for it.As the healthcare real estate market continues to evolve, industry leaders remain cautiously optimistic about its future. The sector's fundamental strengths, combined with emerging opportunities, position it for steady growth in the coming years, despite ongoing economic uncertainties.