The Hidden Costs of Private Equity-backed RCM

In the increasingly commoditized world of revenue cycle management (RCM), many hospital leaders are understandably drawn to vendors that promise speed, scale, and cost savings, often backed by substantial investments from private equity (PE) firms. At first glance, these PE-owned RCM giants appear to offer everything a hospital needs: advanced AI, large teams, and competitive pricing.

Private equity has reshaped the healthcare revenue cycle management landscape over the past decade. Promising efficiency, scale, and innovation, PE-backed RCM firms have rapidly consolidated the market. Look just below the surface, however, and you’ll find hidden costs that too often go unexamined — costs that show up not just on financial statements, but in patient experience, staff morale, and organizational trust. To do your due diligence, it’s important to uncover the financial, operational, and ethical costs associated with that contract you’re signing. You’ll probably find those costs outweigh the benefits.

Curious? Here’s why private equity ownership in RCM might be costing hospitals more than they realize.

Investor priorities compete with client outcomes. Yes, I said it. Private equity firms are accountable to one thing: shareholder returns. Their goal is to extract maximum profit over a short-term horizon—typically 3 to 7 years—before selling the company or going public. That imperative drives decisions from the top down, and those decisions aren’t good for patients or providers.

What does that look like in practice? PE-backed companies offshore key processes to cut labor costs—at the expense of patient experience and compliance. They tend to slash training budgets, increase rep quotas, and over-automate workflows to squeeze more out of every employee, and they create internal silos where clients become ticket numbers, not partners.

Are these firms unethical? No, not at all. It’s just that their primary customer isn’t you, it’s their investors.

PE places a financial burden on patients. This is where the question of ethics comes into play. A 2024 report by the Private Equity Stakeholder Project revealed that PE-owned RCM firms have played a central role in the U.S. medical debt crisis, which now affects more than 14 million Americans and totals more than $220 billion [1]. These firms often bundle services like billing, collections, and financing into “end-to-end” platforms that aggressively pursue payment, sometimes through medical credit cards or installment loans with high interest rates.

This model can trap patients in cycles of debt, especially those with high-deductible plans or limited financial literacy. Complaints logged with the Consumer Financial Protection Bureau highlight issues such as attempts to collect debts not owed or inflated balances [1]. We know that medical debt makes patients sicker, and up to 15% of patients with medical debt have experienced denial of care [2]. How is this good for anyone but investors?

PE dilutes services and causes client churn. Providers say that PE-backed vendors take weeks to respond to issues, routinely drop the ball on denials follow-up, change account managers constantly, and treat feedback like a nuisance, not a necessity. Indeed, the empirical evidence that large outsourced RCM systems have delivered on their promises is sparse, with industry consultants regularly pointing to “healthcare providers’ ongoing struggles with … RCM inefficiencies” [3]. Why does this happen?  When companies scale rapidly to hit revenue targets, service becomes a cost center, not a value driver. While PE firms tout operational efficiency, the reality for many health systems is churn. Frequent ownership changes, cost-cutting mandates, and offshoring can lead to high staff turnover, loss of institutional knowledge, and inconsistent support and communication, which means providers are left holding the bag.

Tech as a human replacement. Many PE-backed RCM firms promote AI-first workflows as a way to streamline operations. But in practice, that often means replacing human oversight with algorithms—and missing the nuances of complex payer behavior, edge-case denials, and critical coverage discovery. Let’s be clear: At this point, A.I. is a tool with a blunt edge. It’s like trying to do surgery with a butter knife. You might reach your target, you might not, but rest assured, there’ll be a lot of waste, a lot of missed things, and a really ugly scar.

PE invites regulatory and reputational risk. As scrutiny of PE in healthcare intensifies, providers risk reputational damage by association. Lawmakers are exploring measures to increase transparency and limit the influence of PE in sectors like debt collection and RCM [1]. Providers must weigh not just cost and performance, but also the optics and ethics of their vendor relationships.

The most egregious problem? Strategic misalignment. PE firms often prioritize short-term returns over long-term relationships. This can manifest in various ways, such as aggressive upselling of services without regard for the client’s real needs, reduced flexibility, and most importantly, misalignment with the provider’s values of patient care, health equity, and community trust.

A Better Way: Privately Held, Purpose-Built RCM

Because we’re privately held, Salud doesn’t report to investors. We report to you. That means we can:

• Invest in people, not just platforms

• Stay aligned with your mission, not a growth target

• Be agile and responsive

• Deliver results over time, not just in this quarter

We understand the financial pressures hospitals face. But we also believe that cheap RCM often turns out to be the most expensive option, especially when it comes to trust, quality, and long-term stability. Private equity has brought capital and consolidation to RCM, but at what cost? For providers seeking stability, transparency, and alignment with mission-driven care, the hidden costs of PE-backed RCM may be too high. As the industry evolves, the value of long-term partnerships rooted in trust, accountability, and shared purpose is becoming clearer than ever.

So, here’s the question you need to ask if you're re-evaluating your RCM partner —"Are they accountable to my hospital—or to their investors?" The answer may surprise you.

References

1.      PRIVATE EQUITY’S REVENUE CYCLE: - pestakeholder.org

2.      Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills - Main Findings - 9957 | KFF

3.      Ak, Abhishek and Ankur Verma. 2024. “Economic Oasis: How Revenue Cycle Management is Emerging as an Investment Beacon.” Blog. Everest Group. April 10. https://www.everestgrp.com/business-process-services/economic-oasis-revenue-cycle-management-thriving-through-turbulent-times-blog.html (accessed July 10, 2025).