March 29, 2023 - The first piece in this series of articles about private equity investment in health care outlined key compliance considerations for private equity investors. Compliance programs are necessary for protecting private equity (and health care providers) from legal liability, and federal government enforcement agencies have not ignored the operations of private equity-backed health care providers, with the investors themselves facing increasing risk of liability.
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In fact, private equity-backed health care has been on the radar of several government enforcement agencies for nearly 15 years. For example, the U.S. Department of Health and Human Services Office of the Inspector General (OIG) documented its awareness of the increase in private equity investment in the nursing home industry in work plans as early as 2009. Fast forward 13 years, and President Biden turned the spotlight on outside investors entering more aggressively into the nursing home space in his 2022 State of the Union address stating, "And as Wall Street firms take over more nursing homes, quality in those homes has gone down and costs have gone up." He pledged to put an end to that trend during his administration.
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While it is early yet to see significant action coming from the U.S. Department of Justice (DOJ) since Biden's State of the Union, there are many prior actions for private equity investors to regard as cautionary...
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