Goldman Sachs's Pediatric Practice Investment Underscores Wall Street's Trillion-Dollar Influx into U.S. Healthcare

A recent observation by Emma Freer, shared on social media, has drawn attention to the expanding role of Wall Street in the United States healthcare system, specifically highlighting Goldman Sachs's investment in a pediatric practice. Freer stated in her tweet, "I discovered that the primary investor in my children’s pediatric practice is Goldman Sachs... The idea that Wall Street would own a pediatrician’s office would have seemed absurd a generation ago, but increasingly that’s how health care in the United States works." This personal revelation reflects a growing national trend of private equity firms significantly increasing their stake in medical services.

Private equity (PE) firms have invested over $1 trillion in healthcare transactions during the past decade, driven by the sector's stable demand, aging population, and fragmented markets ripe for consolidation. These firms typically acquire healthcare providers, aiming to enhance financial performance through operational efficiencies and scale before selling for a profit. This strategy has led to PE ownership across a wide spectrum of healthcare, including hospitals, nursing homes, and a rapidly increasing number of physician practices.

The acquisition of physician practices, including those in pediatric specialties like dentistry, ophthalmology, and increasingly primary and urgent care, is a key area of PE focus. Firms consolidate smaller practices into larger networks, seeking greater negotiating power with insurers and opportunities to expand services. The American Medical Association (AMA) reported a significant acceleration in PE acquisitions of physician practices in 2023, noting that nearly one in five practices were owned by PE firms or hospitals by the end of 2022.

However, this financialization of healthcare has raised substantial concerns among patients, providers, and policymakers regarding its impact on care quality, access, and affordability. Critics argue that PE's profit-driven model can lead to cost-cutting measures such as reduced staffing, use of cheaper supplies, and a shift towards higher-reimbursing procedures over routine care. Senator Chris Murphy (D-Conn.) detailed these concerns in his report, "A Dangerous Prospect: How Private Equity Decimated Connecticut Hospitals," which was prompted by his own discovery of Goldman Sachs's investment in his children's pediatric practice.

Senator Murphy's report outlines a "private equity playbook" that involves loading acquired facilities with debt, extracting assets, and cutting costs, often at the expense of patient safety. He warned that "private equity comes in, squeezes the life out of hospitals and doctor’s offices, and then leaves patients and communities in the lurch." In response to these growing concerns, the Biden-Harris Administration has announced new actions to protect patients and strengthen competition, including joint public inquiries by the Department of Justice and Federal Trade Commission into the impact of private equity on healthcare.