Health Care Financialization

<p>When a patient dies because a private equity-backed hospital cannot afford essential medical supplies amid financial collapse, something deeper than mismanagement is at work. This Article defines and examines <i>health care financialization</i>—the reorientation of health care institutions from producing health for patients and communities to extracting wealth for investors and corporate managers. Financialization is characterized by three core features: (1) the transfer of governance from community stakeholders and clinicians to financial investors and executives; (2) profit generation through financial engineering and labor suppression rather than value creation; and (3) avoidance of accountability via consolidation, delocalization, and complex corporate structures.</p> <p>The dynamics of health care financialization are illustrated through two case studies: private equity’s leveraged buyouts and asset-stripping of health care providers, and Medicare Advantage insurers’ vertical integration into care delivery. In both, financialization produces systemic risks: increased spending through consolidation and regulatory gaming, reduced quality and access to care for patients, and demoralization and attrition among clinicians. These harms are particularly troubling in a system that is predominantly taxpayer-financed, where private returns are drawn from public funds.</p> <p>Recognizing that health care providers often require private capital, we do not advocate for its wholesale exclusion nor its unfettered entry. The policy challenge is to enable capital investment without succumbing to financialization’s extractive logic. To that end, we outline a three-part framework for research and policy aimed at enabling beneficial investment while curbing extractive practices: reforming payment policy through direct price regulation; shaping markets with structural separation, access and nondiscrimination rules, and ownership and governance requirements; and building and allocating supply via public investment, targeted workforce development, and entry/exit restrictions.</p> <p>These tools depart from prevailing managed-care paradigms and draw instead on the Progressive Era and New Deal public-utility tradition, adapted to the contemporary health care system. We conclude by calling for a governing framework that reorients U.S. health care toward the welfare of patients, communities, and clinicians—and away from the imperatives of financial extraction.</p>