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Jean LeBoutillier, a resident at the Life Care Center of Kirkland, says goodbye to her family following a much anticipated visit in August, the first time she's seen her loved ones in person since February when Covid-19 raced through the facility. (Photo: Karen Ducey/Getty Images)

Financialized Care Is Not Care at All: Maximizing Profits at the Expense of Those in Need

Private equity firms are increasingly entering the care and support sector, especially when public money is involved.

The promise of 300 million jobs in care as a key feature of recovery from the COVID-19 pandemic is a tempting invitation for investors seeking new profit opportunities, especially if more public monies are committed. Mature segments of the care sector that have received massive private investments—such as health care, nursing homes, and long-term care—tell us that we need democratised finance to build a care economy that ensures alignment of women’s rights, workers’ rights, and care receivers’ rights.

To generate 300 million jobs by 2035, annual investment of 3.2 per cent of global GDP will be required. More than three-quarters of the new employment will benefit women, and over 80 per cent of these new jobs will be formal work, according to a new ILO report. Women’s rights organisations want increased public spending on care to redistribute responsibilities between families or households and care provided by government agencies. Meanwhile, care gaps have been filled by arranging services from a spectrum of care givers spanning domestic workers, non-profit or volunteer groups, and corporate or even multinational providers. Should public investments deliver, we can expect a trend towards consolidation in the sector, making it even more attractive for private investors.

Increasingly privatised and financialised

Public spending crowds-in private investment, as health care and long-term care has shown. However, other policies also entice private-sector investment in care, such as public-sector management practices focused on efficiency and productivity (as in Canada, UK, and USA), more liberal foreign-ownership rules (as in India, China, and some Southeast Asian countries), and greater opening of procurement policies to foreign contractors (as in Turkey). Labour market flexibilisation is an essential ingredient, as demonstrated by the long-term care home sector in British Columbia in Canada, where sectoral bargaining and contracting protections for care workers have been removed.

Private equity investments in health care in particular spark serious concerns. Between 2010 and 2019, such investment in the health care sector rose from $41.5 billion to $119.9 billion in the US, with new investments focused on in-home health care and outpatient care. Multilateral financial institutions, such as International Finance Corporation (IFC) and CDC Group, have partnered with private equity investors in health care to support sustainable development goals for health. In Africa, the IFC launched the Africa Health Care Fund, whose first closing raised $57 million to support small and medium-scale enterprises in health clinics and diagnostic centres.

An estimated 20% of global infrastructure projects in health care are in developing countries. Public-private partnerships are a frequent financing option for health care delivery, blending design, build, finance, maintain, operate and manage components. Lesotho and Peru already have complex projects in operation combining infrastructure with clinical and non-clinical services. A few other countries in  Latin America are planning or operating PPPs in health care and many other countries are looking to join the club.

Venture capital firms chasing high returns on technological innovations are interested in telehealth and telemedicine. One major market entrant, Amazon Care, launched nationally in the US in February 2022, having entered into a partnership in 2019 with the UK’s National Health Service to provide health care information.

Unhealthy outcomes

Private equity investors in health care are gaining notoriety, however, as their profit motives conflict with well-being outcomes for care recipients in their institutions. Case studies bear out concerns about the quality of care and ethical standards in health facilities owned by private equity investors due to the pronounced focus on revenues. Studies comparing for-profit with not-for-profit facilities find lower staffing ratios in the former or highly skilled staff replaced by less skilled teams, all with a view to reducing personnel costs. One study between 2000 and 2017 using data on nursing homes merged with patient-level data in the US found that “going to a PE [private equity]-owned facility increases 90-day mortality by about 10% for short-stay Medicare patients, while taxpayer spending over the 90 days increases by 11%”. The same study found a higher probability that patients in private-equity owned facilities would be on anti-psychotic medications, experience reduced mobility, and report more intense pain.

Democratise finance to build care economies

The association of poor health outcomes with private equity raises the question of the feasibility of designing democratic—even egalitarian—financial institutions to fund well-being outcomes. Some proposals include expanding into non-profit credit unions, public investment banking, progressive management of sovereign wealth funds, inclusive ownership funds within corporations controlled by their workers, anti-trust regulation to reduce concentration in finance, and even nationalising banking. When finance cares, we might have a genuine care economy.


Marina Durano

Dr. Marina Durano is a feminist economist and an Adviser on Care Economy and Partnership Engagements to the UNI Global Union.

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