When Private Equity Comes to Town: Why Your Bills Go Up and Service Goes Down

The Playbook Is Always the Same

Private equity firms follow a remarkably consistent pattern when they acquire companies, especially in sectors like healthcare, veterinary services, housing, and other essential industries.

First, they load the acquired company with debt. Not the company’s debt—the debt used to buy the company itself gets placed on the company’s books. Imagine someone taking out a massive loan to buy your house, then telling you that you’re now responsible for the mortgage payments. That’s essentially what happens.

Next, they cut costs aggressively. Sounds like good business, right? Except the cuts rarely come from eliminating waste or improving efficiency. They come from reducing staff, squeezing suppliers, and deferring maintenance and improvements. That dental office that used to have three hygienists? Now it has two doing the same workload. The nursing home that used to have a nurse on every floor? Now they’re spread thinner across the building.

Then comes the revenue maximization phase. This is where prices go up for consumers. Sometimes it’s obvious—higher bills, new fees, charges for things that used to be included. Sometimes it’s more subtle—pushing unnecessary procedures, upselling services, finding creative ways to extract more money from the same interactions.

Finally, if things go well, they sell the company for a profit within a few years and move on. If things go poorly, the company collapses under the weight of debt and cost-cutting, often leaving communities without essential services.

It’s Not Theory—It’s Happening Everywhere

Look at healthcare. A 2021 study published in JAMA found that private equity acquisition of hospitals was associated with increased hospital-acquired adverse events. Translation: patients got worse care and experienced more complications.

In nursing homes, the pattern is stark. Research has consistently shown that private equity-owned facilities have higher mortality rates and worse quality metrics than their counterparts. They operate with fewer staff and cut services, all while extracting maximum revenue from Medicare and Medicaid.

The Deadly Consequences in Nursing Homes

The nursing home industry provides perhaps the most disturbing example of private equity’s impact on essential services. This isn’t about minor inconveniences or slightly higher prices—it’s literally about life and death.

Multiple academic studies have documented the connection between private equity ownership and increased mortality in nursing homes. A comprehensive study published in JAMA Health Forum found that private equity acquisition of nursing homes led to a 10% increase in short-term mortality rates among Medicare patients. That translates to an additional 20,150 deaths over a 12-year period across facilities acquired by private equity firms.

Another study examining California nursing homes found that facilities owned by private equity had mortality rates that were 11% higher than comparable facilities. Residents at private equity-owned facilities were also significantly more likely to experience preventable emergency room visits and hospitalizations.

The mechanism behind these statistics is straightforward and tragic: staff cuts. Private equity-owned nursing homes consistently operate with fewer nurses and nurses’ aides per resident than other facilities. When you have one certified nursing assistant responsible for 15 or 20 residents instead of 10, people don’t get turned frequently enough to prevent bedsores. Medication errors increase. Falls happen more often. Early warning signs of serious health problems get missed.

Real Cases, Real Consequences

Consider what happened with Formation Capital’s acquisition of Skyline Healthcare in 2015. Formation Capital, a private equity firm, bought a chain of nursing homes across multiple states. Almost immediately, families and staff noticed changes. Staffing levels dropped. Supplies became scarce. Maintenance requests went unanswered.

Within a few years, the situation became dire. At a Skyline facility in Kansas, inspectors found residents lying in their own waste for hours because there weren’t enough staff to provide basic care. At another facility in New Mexico, residents went without proper meals because the kitchen was understaffed and undersupplied. State health departments began issuing violations and fines, but the problems persisted.

By 2018, Skyline’s facilities were in such poor condition that several states took the extraordinary step of placing them into receivership—essentially removing them from the company’s control because conditions had become dangerous for residents. Formation Capital walked away, having already extracted millions in fees and debt payments. The residents and their families were left to deal with the consequences.

The HCR ManorCare case tells a similar story on a larger scale. In 2007, the Carlyle Group, one of the world’s largest private equity firms, acquired HCR ManorCare, then one of the nation’s largest nursing home chains, for $6.3 billion. The deal loaded ManorCare with debt and involved a sale-leaseback arrangement where the company had to pay rent to occupy its own facilities.

Within a few years, quality metrics at ManorCare facilities began declining. Staff-to-patient ratios dropped. Health inspection violations increased. Former employees reported pressure to cut corners on care while dealing with understaffing. By 2018, ManorCare filed for bankruptcy, crushed under $7 billion in debt—more than the original purchase price.

During those years of decline, elderly residents suffered. Families reported loved ones developing preventable bedsores, experiencing unexplained falls, and receiving inadequate attention from overworked, understaffed nursing teams. Many facilities that had maintained good reputations for decades saw their quality of ratings plummet under private equity ownership.

The Staffing Crisis by Design

The cost-cutting that drives these outcomes isn’t accidental—it’s the business model. Labor represents the largest expense in nursing home operations, typically accounting for 60-70% of costs. When private equity firms seek to maximize profits and service debt loads, staffing becomes the primary target.

The cuts happen in multiple ways. Direct care staff get reduced. Experienced nurses and aides, who command higher salaries, are replaced with less experienced workers earning lower wages. Full-time positions with benefits become part-time positions without them. Administrative staff who handle quality assurance and regulatory compliance get eliminated.

The result is facilities where remaining staff are stretched impossibly thin. A nurse’s aide might be responsible for bathing, dressing, toileting, and feeding 15 or 20 residents during a shift—a workload that makes providing attentive, dignified care nearly impossible. Nurses find themselves managing dozens of residents with complex medical needs, increasing the likelihood of medication errors and missed warning signs.

The human cost extends beyond mortality rates. Quality of life suffers profoundly. Residents at understaffed facilities spend more time alone, receive less social interaction, and miss out on activities that provide mental stimulation and dignity. Depression rates increase. Functional decline accelerates. The final years of life, which should be lived with comfort and dignity, become an ordeal of neglect.

The Regulatory Failure

One might ask: don’t nursing homes face regulation and oversight? They do, but the system has proven inadequate to address the private equity problem.

Nursing homes are regulated at both federal and state levels, with regular inspections and quality standards. However, private equity firms have become adept at working within and around these regulations. They structure ownership through complex corporate arrangements that obscure accountability. They pay fines when caught, treating them as a cost of doing business. They hire consultants who specialize in gaming inspection systems, ensuring facilities look acceptable during scheduled visits while operating under substandard conditions the rest of the time.

Moreover, enforcement is often weak. Inspectors note violations, facilities promise corrective action, and the cycle repeats. Regulators can impose fines, but these rarely match the profits being extracted. The most severe penalty—closure or loss of Medicare/Medicaid certification—is rarely pursued because it would leave vulnerable residents with nowhere to go.

Following the Money

Where does all this money go? While residents receive diminished care, private equity firms extract value through multiple channels.

Management fees flow from the nursing home company to the private equity owners, regardless of performance. The debt used to acquire the facilities generates interest payments that enrich lenders. Sale-leaseback arrangements mean facilities pay rent to entities also controlled by the private equity firm—essentially paying rent to themselves, creating a guaranteed revenue stream.

Dividend recapitalizations allow private equity owners to have the nursing home company take on additional debt and pay the proceeds out as dividends. This means that even as facilities struggle under existing debt loads and cut care to make payments, owners can extract even more money by piling on additional debt.

When facilities inevitably fail under this financial engineering, the private equity firms have often already recouped their initial investment and then some. The facilities close or get sold at distressed prices. Residents get displaced. Staff lose jobs. Communities lose needed care capacity. But the private equity firm has already moved on, investment returned, profit realized.

Your Pet Isn’t Safe Either: The Veterinary Takeover

If the nursing home story seems disturbing, consider what’s happening to veterinary care—an industry that most people never imagined would become a target for financial engineering.

Over the past decade, private equity has quietly consolidated what was once a field dominated by independent practitioners into an industry increasingly controlled by a handful of corporate entities. The transformation has been swift and comprehensive, and pet owners are feeling the impact in their wallets and in the quality of care their animals receive.

The Scale of Consolidation

The statistics tell a remarkable story. In 2007, corporate entities owned fewer than 5% of veterinary practices in the United States. Today, that number exceeds 25% and continues climbing rapidly. Some estimates suggest corporate ownership could reach 50% within the next few years.

The largest player is Mars Petcare, the pet division of Mars Inc. (yes, the candy company). Through its Banfield Pet Hospital, VCA Animal Hospitals, and BluePearl Veterinary Partners brands, Mars owns or manages over 2,500 veterinary hospitals across North America. While Mars is a privately held corporation rather than a traditional private equity firm, it operates with similar consolidation strategies and profit-maximization objectives.

Private equity firms have been equally aggressive. JAB Holding Company, a private equity firm better known for its coffee empire (Peet’s Coffee, Caribou Coffee, Krispy Kreme), owns National Veterinary Associates (NVA), which operates approximately 1,000 veterinary hospitals. The firm has been on an acquisition spree, buying independent practices at a rapid clip.

CVS Health, backed by various institutional investors including private equity, acquired Oak Street Health and has been expanding into veterinary services. Pathway Vet Alliance, backed by private equity firm Crestview Partners, operates hundreds of practices. Mission Veterinary Partners, backed by private equity firm Partners Group, has been aggressively consolidating specialty and emergency practices.

The Acquisition Process

The typical acquisition follows a predictable pattern. A private equity-backed consolidator approaches a successful independent veterinary practice with an offer the owner finds difficult to refuse. The numbers often look compelling: perhaps $5 million for a practice the veterinarian built over decades, with an option to stay on as an employee for several years.

For aging veterinarians looking to retire, or younger ones overwhelmed by the business aspects of practice ownership, the offer seems attractive. They get cash now, shed the administrative burden, and supposedly maintain clinical autonomy.

The reality after acquisition tells a different story.

How the Playbook Unfolds in Veterinary Medicine

Once a practice gets acquired, the familiar private equity optimization process begins, tailored to the specific economics of veterinary medicine.

Price Increases: Perhaps the most immediately noticeable change is pricing. Examinations that cost $50 at an independent practice might jump to $75 or $100 under corporate ownership. Routine procedures like teeth cleanings can double in price. Diagnostic tests, medications, and surgical procedures all see significant markups.

The increases aren’t justified by improved care or facilities. They’re driven by the need to service acquisition debt and generate returns for investors. Corporate owners conduct market analysis to determine what prices the local market will bear, then push prices toward those maximums regardless of the practice’s historical pricing.

Wellness Plans and Upselling: Corporate-owned practices heavily push monthly wellness plans and package deals. While these can provide value for some pet owners, veterinarians report intense pressure to sell these plans even when they’re not in the pet’s best interest.

The sales pitch often includes unnecessary services or excessive testing. Does your dog really need that comprehensive blood panel every six months if they’re young and healthy? Probably not, but wellness plans make it a standard feature because it generates revenue.

Veterinarians also face pressure to upsell additional services at every visit. Dental cleaning? Let’s also recommend this $300 dental X-ray package. Skin infection? In addition to treatment, here’s a $150 allergy test panel. Routine vaccination? Your pet should really have our premium vaccine package that includes shots they might not need.

Staffing Changes: Just as in nursing homes, corporate ownership often means staffing cuts or changes that affect care quality. Experienced veterinary technicians who earn higher salaries get replaced with newer, less experienced staff. The ratio of support staff to veterinarians decreases, meaning veterinarians spend more time on tasks that technicians traditionally handled.

Many corporate practices operate on appointment models that maximize the number of patients seen per day. Veterinarians who once spent 30 minutes with each patient now have 15-minute appointment slots. The rushed pace makes it harder to thoroughly examine animals, discuss treatment options with owners, or notice subtle signs of health problems.

Loss of Autonomy: Perhaps the most troubling change, from the perspective of veterinary professionals, is the loss of clinical autonomy. Veterinarians report pressure to recommend expensive tests and treatments even when their clinical judgment suggests simpler approaches would be appropriate.

Corporate protocols often require specific diagnostic procedures before certain treatments can be prescribed, even when an experienced veterinarian’s examination makes the diagnosis clear. These protocols generate revenue but add unnecessary costs for pet owners and stress for animals.

Veterinarians also face pressure regarding prescription practices. Corporate owners prefer that medications be dispensed in-house rather than allowing owners to fill prescriptions at outside pharmacies where they might find lower prices. Some corporate practices have been accused of recommending brand-name medications over equally effective generics because of better profit margins.

The Veterinarian Exodus

The impact on veterinary professionals themselves has been significant and troubling. The profession already faced high rates of burnout and depression—veterinarians have one of the highest suicide rates among professional occupations. Corporate consolidation has made these problems worse.

Veterinarians who sold their practices to consolidators thinking they’d shed administrative burdens while maintaining clinical freedom often find themselves trapped in environments antithetical to why they entered the profession. They became veterinarians to help animals, not to maximize revenue per appointment.

Many veterinarians report feeling like they’re working in sales rather than medicine. Performance metrics focus on revenue generation, not patient outcomes. Monthly meetings review individual veterinarians’ “production numbers”—how much revenue they generated—with implicit or explicit pressure to increase those numbers.

The pressure creates ethical dilemmas daily. Should you recommend that expensive diagnostic test the corporate protocol requires, even though you’re fairly certain of the diagnosis and the pet owner is struggling financially? Should you push the wellness plan to meet your monthly quota, even though this particular client’s needs would be better met with a la carte services?

Some veterinarians stay despite their discomfort, feeling obligated by employment contracts or golden handcuffs (agreements that they’ll receive full payment for their practice only if they stay for several years). Others leave corporate practice, seeking positions at remaining independent practices, starting mobile veterinary services, or leaving clinical practice entirely.

The exodus of experienced, caring veterinarians from corporate practices often leaves those facilities staffed by newer graduates who don’t yet have the experience or confidence to push back against corporate protocols, or by veterinarians who’ve accepted the corporate model as simply how modern veterinary medicine works.

The Emergency and Specialty Squeeze

Private equity has been particularly aggressive in consolidating veterinary emergency and specialty practices. This sector offers especially attractive returns because emergency services can charge premium prices and clients have little negotiating power when their pet faces a crisis.

BluePearl Veterinary Partners, owned by Mars, operates the largest network of specialty and emergency hospitals in the country. When your dog gets hit by a car at 11 PM on a Saturday, there’s a decent chance the nearest emergency clinic is owned by a private equity-backed consolidator.

Emergency veterinary bills have skyrocketed. A visit that might have cost $500 a decade ago now regularly runs into thousands of dollars. Some of this reflects the advancing sophistication of veterinary emergency medicine, which is now capable of interventions that would have been impossible years ago. But much of it reflects pricing power exploitation.

Clients facing a pet emergency are in no position to shop around. When your cat is struggling to breathe or your dog is seizing, you go to the nearest emergency clinic and accept whatever charges they impose. Private equity-owned practices understand this dynamic and price accordingly.

The Impact on Pet Owners

For pet owners, the consolidation trend creates multiple problems beyond just higher prices.

Continuity of care suffers when corporate practices have high veterinarian turnover. Building a relationship with a veterinarian who knows your pet’s history and personality becomes difficult when that veterinarian leaves every year or two.

The quality of care may decline when veterinarians work under pressure to maximize patient volume and revenue. That respiratory infection might get treated with a quick antibiotic prescription rather than a thorough examination that would reveal it’s actually heart disease requiring different treatment.

Trust erodes when every visit feels like a sales pitch. Pet owners begin to wonder whether recommendations are driven by their pet’s health needs or the practice’s revenue targets. Some owners delay veterinary care because they’ve learned that a “simple checkup” inevitably results in recommendations for hundreds of dollars in additional services.

The hardest impact falls on moderate and lower-income pet owners. Veterinary care was already expensive; corporate consolidation makes it prohibitive for many families. The same economic forces that have squeezed middle-class households in healthcare, housing, and other essentials now apply to pet care.

Some families face heartbreaking choices: surrender a beloved pet because they can’t afford treatment, skip recommended care and hope for the best, or go into debt for veterinary bills. GoFundMe campaigns for pet medical expenses have become common, a tacit admission that veterinary care pricing has outpaced what ordinary people can afford.

Why Veterinary Medicine Attracted Private Equity

From a private equity perspective, veterinary medicine has several attractive characteristics.

The market is fragmented, with thousands of independent practices ripe for consolidation. Unlike human healthcare, veterinary medicine faces minimal regulation—no insurance billing complexities, no HIPAA compliance, no state certificate-of-need requirements for opening facilities.

Pet ownership has grown, and pet owners increasingly view their animals as family members worthy of significant medical spending. This willingness to pay for pet care creates pricing power, especially for services like emergency care, specialty treatment, and end-of-life care.

The industry is also somewhat opaque. Most pet owners have no frame of reference for what veterinary services should cost, making it easier to raise prices significantly without triggering resistance. There’s no equivalent to insurance explanation-of-benefits statements that might help pet owners understand pricing.

Veterinarians, traditionally focused on medicine rather than business, often operated their practices with relatively modest profit margins. From a private equity perspective, this represented “inefficiency” to be eliminated through better pricing strategies, cost controls, and revenue optimization.

Fighting Back: What Remains

Not all veterinarians have sold out, and a growing movement advocates for preserving independent veterinary medicine. Some practitioners have formed cooperatives or group practices structured to prevent acquisition. Others have taken their practices mobile, serving clients at their homes and avoiding the overhead that makes practice ownership burdensome.

Professional associations have begun addressing the consolidation issue, though progress is slow. Some states have considered legislation to increase transparency in practice ownership or to restrict certain corporate practices, but veterinary lobbying groups—now heavily influenced by corporate consolidators—have fought these efforts.

Pet owners who want to avoid corporate veterinary medicine can still find independent practices, though they’re becoming harder to find, especially in urban areas where consolidation is most advanced. Asking directly about ownership structure is reasonable; independent veterinarians are usually proud to say they own their practice and make their own medical decisions.

The veterinary story illustrates how private equity consolidation affects industries that seem unlikely targets. Who would have imagined that taking your dog to the vet would become another arena for financial engineering? Yet here we are, with the same patterns playing out: consolidation, debt-loading, price increases, cost-cutting, and value extraction, all while the quality of care and the welfare of professionals in the field decline.

The housing market tells a similar story. Private equity firms have bought up hundreds of thousands of single-family homes and apartment complexes. Rents have increased—often dramatically—while maintenance requests pile up and community amenities disappear. You’ve probably seen it in your own neighborhood: that apartment complex that changed hands and suddenly everyone’s complaining about broken elevators and unresponsive management.

Why Does This Keep Happening?

The simple answer: because it’s profitable. Private equity firms aren’t in the business of running hospitals or apartment buildings long-term. They’re in the business of extracting maximum value in minimum time.

The structure of private equity itself creates perverse incentives. These firms raise money from investors (often pension funds and university endowments, ironically), promising high returns. To deliver those returns, they need to dramatically increase the value of companies they acquire in just a few years. That doesn’t leave much room for patient, sustainable growth or investment in long-term quality.

The debt loading is particularly insidious. It creates a financial urgency that justifies aggressive cost-cutting and price increases. “We have to do this to survive,” becomes the refrain, even though the debt burden was entirely optional and self-imposed.

The Market Failure Nobody Wants to Admit

Here’s the uncomfortable reality: this model thrives in markets where consumers have limited choice, limited information, or limited ability to shop around.

When you need emergency surgery, you’re not comparison shopping between hospitals. When your loved one needs a nursing home bed in your town, you take what’s available. When corporate landlords own most of the rental properties in an area, where exactly are you supposed to move?

Private equity has been particularly aggressive in essential services precisely because these markets have captive consumers. You can’t just decide not to use healthcare. You can’t easily relocate every time your rent spikes. Your pets need veterinary care whether or not you like the new owners of the clinic.

Traditional market discipline—where bad companies lose customers and fail—doesn’t work the same way in these sectors. By the time consumers realize they’re getting a raw deal, private equity may have already extracted their returns and moved on.

What’s the Solution?

A few things seem clear.

First, transparency is needed. When private equity acquires companies in essential services, that shouldn’t be opaque. Communities deserve to know who owns their hospitals, their housing, their critical infrastructure.

Second, sector-specific regulations might be necessary. When an industry model consistently produces worse outcomes for consumers, society can’t just shrug and say “that’s the market.” Some countries limit debt-loading on acquisitions in healthcare. Others restrict foreign or financial ownership of housing. These aren’t perfect solutions, but they’re responses to real problems.

Third, competition needs strengthening. One reason private equity thrives is consolidation. When three companies control an entire market, private equity can buy one and face limited competitive pressure. Vigorous antitrust enforcement isn’t anti-business—it’s pro-market.

Finally, consumers need to understand what’s happening. When your local business gets acquired by a private equity firm, that’s information worth knowing. It might not change your immediate options, but it helps you understand why suddenly everything costs more and works worse.

The Bottom Line

Private equity has a role in the economy. These firms can genuinely help struggling companies restructure and grow. They can bring capital and expertise to businesses that need both.

But what we’re seeing in healthcare, housing, and other essential services isn’t that. It’s a model that systematically prioritizes short-term financial extraction over long-term value creation. It makes investors wealthy while making consumers poorer and services worse.

That’s not capitalism working as intended. That’s capitalism being gamed.

And the sooner we’re honest about that, the sooner we can start fixing it.

What’s been your experience with private equity-owned businesses? Have you noticed changes in your healthcare, housing, or other services? The conversation needs to include voices from people living through these changes, not just the financial engineers profiting from them.