Are for-profits, private equity to blame for rising medical costs, reduced quality, choice? - Harvard Gazette

"In this edited conversation, Chandra, who is director of the Malcolm Wiener Center for Public Policy at Harvard Kennedy School and the Henry and Allison McCance Family Professor of Business Administration at Harvard Business School, said contrary to popular opinion, profit-seeking in healthcare doesn't necessarily mean that patients will be worse off. What is corporatization? Corporatization is essentially a deal between a medical organization and investors."

"Frustrated by the relentless rise in healthcare costs, many Americans think they know who's to blame for the high cost of prescription drugs, the shuttering of local hospitals and clinics, and the merger of their favorite doctor's medical practice with a competitor: for-profit corporations and private equity firms. This growing trend in the U.S. is known as corporatization. Investors supply much-needed funding to pharmaceutical and biomedical companies, healthcare institutions, and physicians to help pay for drug development, meet escalating expenses, and increase efficiency and scale."

Private investment and corporatization provide capital to pharmaceutical and biomedical companies, hospitals, and physician practices to fund drug development, update facilities, support research, and offer competitive salaries. Investors receive an agreed share of profits that can range from small percentages to large equity stakes. Profit-seeking can enable innovation, scale, and efficiency when incentives align with patient outcomes. Critics warn that profit motives sometimes reduce quality, limit choice, and raise costs. Effective contract design, regulation, and performance measurement are necessary to ensure that financial growth translates into better care rather than higher expenses.

Read at Harvard Gazette