You’ve likely noticed the changes. Perhaps your independent practice was approached with a buyout offer that seemed too good to refuse…
Maybe your clinic was acquired, and suddenly, there are new productivity metrics, pressure to see more patients, or requirements to refer for additional services…
Or possibly you’ve watched colleagues struggle with diminishing autonomy after mysterious corporate entities purchased their employers…
Or as a sole practitioner, you noticed an overwhelming load of social media ads trying to steal your current and future clients…
Welcome to the world of private equity in healthcare—a world mental health professionals must understand and confront. At WisePractice, we are committed to protecting the soul of therapy by giving you the tools and knowledge to thrive while ensuring clients receive optimal care. Our care goes beyond world class practice management software to help you and your cohort of like-minded therapists everything you need to thrive in independent private practice. Together, we´re keeping the soul in therapy.
What Is Private Equity and Why Should You Care?
Think of Private Equity (PE) firms as big-money house flippers but for healthcare practices. They buy businesses, make rapid changes to boost profits and sell them for much more money after just a few years.
Unlike hospitals or regular investors who plan to stay involved for the long haul, PE firms typically plan to exit within 3-5 years. They’re in a rush to make as much money as possible, as quickly as possible.
How does Private Equity affect therapists and your patients?
A recent Stanford Law Review article by Fuse Brown and Hall (2024) explains why PE’s approach is particularly troubling for healthcare:
- They use your practice’s value against you: PE firms rarely pay for acquisitions with their own money. Instead, they put down a small amount (often just 2%) and saddle your practice with loans for the rest. This debt creates enormous pressure to make more money fast.
- They’re outsiders to healthcare: PE investors aren’t doctors or therapists. They don’t have the same ethical commitments to patients that you do. Their primary goal is financial returns, not healing.
- They change how you practice: To boost profits quickly, PE firms often push therapists to see more patients in less time, cut support staff, add unnecessary services, or bill more aggressively.
- They target mental health specifically: Our field is especially attractive to PE because of growing demand, fragmented markets (lots of small, independent practices), and multiple ways to extract more money.
As Fuse Brown and Hall put it, PE essentially turns healthcare practices into “a means to extract wealth for investors,” prioritizing “quick profits at the expense of patient care.”
Real-World Impact on Mental Health Care
What happens when PE takes over mental health practices? The changes can be subtle at first, then increasingly concerning:
- Less time with patients: Therapists report pressure to shorten sessions or pack more patients into each day.
- Staff cuts: PE firms often reduce “non-revenue-generating” staff like receptionists or case managers to save money.
- Pressure to upsell: You might face expectations to refer patients for additional services within the same company, whether they need them or not.
- Loss of decision-making power: Clinical decisions can become secondary to financial targets.
The mental health field, where trust and relationship-building are essential, is particularly vulnerable to damage from these profit-first approaches.
How to Spot PE Influence in Your Workplace
PE firms often hide behind complicated business structures with benign-sounding names. Watch for these warning signs:
- A sudden buyout or a merger with promises of “growth opportunities” and “administrative relief.”
- New requirements to track productivity or revenue generation
- Reduction in support staff while patient load increases
- Decisions increasingly made by non-clinical managers
- Focus on short-term revenue rather than long-term care quality or staff wellbeing
Fighting Back: Practical Steps for Therapists
You’re not powerless against these forces. Here are straightforward actions you can take:
1. Know Who You’re Really Working For
Before joining a practice or selling your own, ask direct questions: Who ultimately owns this business? What are the revenue expectations? How much debt does the practice carry?
2. Use Legal Protections That Already Exist
Many states have laws called “corporate practice of medicine” prohibitions that limit how much control non-clinicians can have over healthcare. These laws can be powerful tools for maintaining clinical independence.
3. Push for Transparency
Support rules requiring healthcare businesses to clearly disclose who owns them. Patients deserve to know who’s influencing their care, and transparency makes it harder for PE firms to use some of their most aggressive tactics.
4. Document Problems and Speak Up
If you see practices that hurt patient care, document them and report to appropriate authorities. Whistleblower protections may apply, especially in cases involving Medicare or Medicaid.
5. Join Forces with Colleagues
Connect with other therapists through professional associations or unions to advocate for policies that protect your professional judgment and patient care standards.
6. Help Your Patients Understand
Educate clients about how corporate ownership might affect their care and how to advocate for themselves.
7. Support Better Policies
Several approaches could address PE’s worst effects, including:
- Better enforcement of antitrust laws to prevent too much market concentration
- Stronger oversight of billing practices
- Requirements that therapists maintain control over clinical decisions
- Limits on how much debt can be loaded onto healthcare practices
Protecting the Soul of Therapy
The corporatization of mental health care isn’t inevitable. As therapists committed to healing, we have both the right and the responsibility to shape how mental health services are delivered.
Private Equity firms are quickly gaining control over more and more practices. We need to act now.
As mental health professionals, we stand at the crossroads between quality care and market pressures. By understanding how Private Equity impacts therapists and clients and how the PE business mode works, and speaking up for policies that put patients before profits, we can preserve what makes therapy effective: the genuine human connection that heals.
The future of mental health care depends on it.
We´re here as your partner, every step of the way. If you are looking for a community of like-minded counselors using their mental health software for good, and growing their private practices together, WisePractice just might be the best place for you and your practice. I warmly invite you to join us! With appreciation,
Brian