Leslie Norwalk, Strategic Counsel, writing on behalf of EBG Advisors, recently submitted a letter in response to a joint “Request for Information on Consolidation in Health Care Markets” issued by the Department of Justice, Department of Health and Human Services, and Federal Trade Commission.
Following is an excerpt (see below to download the full letter in PDF format):
This letter is in response to the Department of Justice (DOJ), Department of Health and Human Services (HHS), and Federal Trade Commission’s (FTC’s) joint “Request for Information on Consolidation in Health Care Markets” (RFI). I write as someone with vast experience from many angles as to the value of private equity investment in meeting the needs for capital and operating expertise and resources.
For the past 30 years, I have been involved in health care. After 15 years of practicing law with clients across corporate health care, including payors, providers, and services, I served six years at the Centers for Medicare & Medicaid Services (CMS), where I was the Deputy Administrator for four years and Acting Administrator for one. After leaving CMS, I spent the last 14 years serving as an independent director of 30 health care companies, including publicly traded, privately held, and nonprofit. These companies include providers (physician practices, home health agencies, hospice, other post-acute care services), health insurance companies (Medicare Advantage plans, Medicaid managed care organizations, Affordable Care Act plans), pharmaceutical benefit managers, pharmaceutical companies, medical device companies, and services companies (patient satisfaction, health care analytics, mental health solutions, beneficiary engagement platform, recycling of plastics used in pharmaceutical labs), and more. Additionally, I act as a consultant, providing guidance and investment analysis to those engaged in bringing capital to or seeking capital for health care entities. I serve as a Strategic Advisor with EBG Advisors, a national strategy and management consultancy serving the health care industry, in addition to practicing law in the health care industry.
In my experience, it is apparent that access to capital is a critical component for all types of health care entities to successfully provide quality health care to patients. This is true regardless of whether the entity is for-profit or not-for-profit. Even MedPac recognizes the importance of access to capital when it makes its annual recommendations to Congress regarding Medicare provider payment updates.
Restricting who may provide capital to health care companies or under what terms capital may be provided to health care companies is ultra vires to the authority and mission(s) of the entities issuing the RFI and will ultimately result in damage to the growth, diversity, and technological sophistication of the health care industry as a whole. Such restrictions would deprive health care companies of financial partners for their growth, leaving them dependent on high-interest loans. Ironically, restricting this form of investment would also deprive unions, pension funds, education institutions, and many other limited partners of an avenue for prudently investing their assets in the U.S. health care system—a vertical that constitutes over one-fifth of the U.S. economy.
