Private equity firms expanding across U.S. health care now own about 30% of the country’s opioid treatment programs (OTPs), one of the highest ownership levels in any sector of medicine. In comparison, PE companies own less than 10% of hospitals, about 6% to 7% of physician practices, and similarly small shares across most other areas of health care.

A 2023 evaluation of trends in private equity ownership, published in BMJ, said PE’s reported upsides in health care are real but narrower and less consistently demonstrated than the downsides. Across the literature, it said the most consistent negative finding is higher prices or spending, while evidence on quality is mixed but tilts negative, especially in hospitals. Evidence for access or efficiency gains exists but is thinner and more variable by sector.

Two New Papers

Two new papers involving LDI Senior Fellows, published in February and March of this year, provide further insights into PE trends in the opioid treatment program field. One, in the International Journal of Drug Policy, by Victor Roy, MD, PhD, is titled “When Profit Meets Public Health: Private Equity in Methadone Treatment.” The second, in JAMA Network Open, by Marissa King, PhD, is titled “Private Equity Acquisition and Buprenorphine Prescribing.”

The Roy commentary says two structural factors have made methadone clinics more attractive to PE investors: strict federal regulations that limit methadone treatment to specialized clinics, and stable public funding through Medicaid and Medicare reimbursement that guarantees predictable revenue streams. These factors create barriers to entry for small providers but advantages for large, capitalized corporate chains, encouraging consolidation.

The authors write that “While proponents of PE tout their capacity to infuse capital and modernize care, emerging evidence — combined with concerning patterns from PE ownership in other health sectors — suggests risks of understaffing, aggressive revenue optimization, and regulatory influence” in the opioid treatment field.

Regulatory Influence

They also note that continuing market concentration will strengthen PE firms’ capacity to influence regulation, for instance, to require that methadone be dispensed only through clinics and to block alternative models such as pharmacy- or office-based methadone prescribing.

The authors call for policy reforms, including ownership transparency databases for addiction treatment programs, more stringent oversight of clinic consolidation, and alternative care models for pharmacy-based methadone dispensing.

The King study examined whether PE acquisition of substance use disorder treatment clinics affects how those facilities prescribe buprenorphine, another key medication for treating opioid addiction. It compared the number of patients in treatment and the number of prescriptions written before and after PE acquisition of 90 facilities.

It found that after acquisition, the facilities increased their patient load by 22% and the number of buprenorphine prescriptions by 19%. But quality-of-care metrics for 90- and 180-day retention declined. Ninety-day retention dropped by 6.2%, and 180-day retention dropped by 7.9 percentage points.

Access Up, Retention Down

The findings suggest PE acquisitions of opioid treatment facilities appear to increase access to buprenorphine treatment but reduce patient retention, indicating a possible trade-off between treatment volume and treatment quality.

The Centers for Disease Control and Prevention (CDC) Treatment for Opioid Use Disorder Handbook warns that “Stopping medication too early increases the risk of returning to opioid use” and “Overdose fatality risk is high for people who return to opioid use after a period of treatment.”

The King work concluded that more oversight and monitoring may be needed to ensure that financial incentives align with high-quality, evidence-based addiction treatment.

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The first paper, “When Profit Meets Public Health: Private Equity in Methadone Treatment,” authored by Victor Roy, Benjamin A. Barsky, Erin C. Fuse Brown, and Leslie W. Suen, appeared in the International Journal of Drug Policy. The study, “Private Equity Acquisition and Buprenorphine Prescribing,” authored by Taylor Holdaway, Susan H. Busch, Jackson Reimer, Tamara Beetham, David A. Fiellin, and Marissa King, appeared in JAMA Network OPEN.

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