As many healthcare practitioners and attorneys can attest, private equity investment has become an increasingly prevalent feature of the healthcare industry. From blockbuster deals like KKR’s purchase of Envision Healthcare Corp., to smaller but numerous physician practice buyouts by private equity firms across the country, the perceived benefits of private equity investment have proved alluring to healthcare providers. And from the opposite perspective, the expected profits of the healthcare industry — an industry responsible for nearly a fifth of U.S. gross domestic product (GDP) — have proved powerful attractions for private equity investors. Recent developments in government enforcement and the attention paid to private equity investors in healthcare, however, raise significant enforcement risks for private equity firms interested in healthcare. Three recent False Claims Act (FCA) cases demonstrate the increasing risk faced by private equity firms involved in healthcare investment and guideposts for mitigating that risk.
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