Continuing the Conversation: Takeaways from the SC Bar Convention panel discussing private equity in healthcare
February 25, 2026 • News
Like it or not, private equity is increasingly investing in healthcare. In my recent experience moderating a panel at the S.C. Bar Convention, I was reminded of just how consequential this trend has become.
What is private equity? In general, private equity involves firms managing investor capital to acquire private companies, improve operations, and ultimately exit the investment—often within five to seven years—for a profit. This model now touches thousands of U.S. businesses across industries, and healthcare has emerged as a particularly attractive sector.
In 2010, private equity healthcare deals totaled roughly $15 billion; by 2021, that figure had climbed to $151 billion. An aging population, the prevalence of chronic disease, innovation in drugs and devices, and the perception that some healthcare companies are undervalued in public markets all contribute to healthcare’s appeal—and its potential for high returns.
On the positive side, private equity can bring much-needed capital, operational discipline, and reduced administrative burdens to struggling providers. On the negative side, the pressure to generate returns may create tension between business objectives and patient care.
Risks can also arise when investors lack familiarity with the healthcare regulatory landscape. Practices that are acceptable in other industries may not be acceptable in healthcare.
From a legal perspective, private equity firms and their investors are not insulated from liability, particularly under the False Claims Act (FCA). Courts evaluating these cases focus on whether the firm exercised control over management, had knowledge of fraudulent conduct, and failed to intervene.
The Department of Justice—under both the Trump and Biden administrations—has made clear its intent to pursue FCA cases involving private equity, especially where firms take an active role in illegal conduct or prioritize return on investment in ways that lead to overbilling or unnecessary testing, for example.
Further, in July 2025, DOJ and HHS announced that they were re-establishing a joint FCA Working Group aimed at combating healthcare fraud. The announcement lists several priority enforcement areas, including Medicare Advantage; kickbacks related to drugs, medical devices, and other products paid for by federal healthcare programs; and manipulation of Electronic Health Records systems to drive inappropriate use of Medicare-covered products and services.
Additionally, the announcement suggests that the administration will leverage HHS resources through enhanced data mining and assessment, as opposed to simply relying on the filing of qui tam complaints.
Finally, with legislation on the horizon in various states, the panel encouraged attorneys advising private equity clients to emphasize rigorous pre-investment due diligence and ongoing compliance oversight.
As regulatory scrutiny continues to sharpen, stakeholders in the healthcare space should remain attentive to evolving enforcement priorities. For additional insight into the False Claims Act, readers are encouraged to review the SC Lawyer article authored by Tina Cundari and Fred Hanna: