By Daniel Whitmore, Senior Managing Director for Policy Affairs, HorizonBridge Capital
With public affairs support from Atlas Strategies Group
Recent commentary around the Centers for Medicare & Medicaid Services’ final rule implementing site-neutral payments has created a misleading narrative about private equity’s role in healthcare delivery. As long-term investors in hospitals, physician platforms, and outpatient infrastructure, we believe it is important to clarify what is actually at stake.
This is not a reaction rooted in fear of reform. It is a response grounded in operational reality. “It’s going to kill us all. We will lose our shirts if this goes through.” Said one executive. “We may have to give up Gucci and start wearing Armani.” He said with a shutter.
Facility Fees Reflect System Obligations, Not Arbitrage
Much of the discussion has focused on facility fees as if they were incidental charges rather than structural components of hospital operations. Hospital-based outpatient departments are not interchangeable with physician offices, even when the clinical service appears identical on paper.
Hospitals are required to maintain standby capacity, emergency readiness, compliance infrastructure, and around-the-clock staffing that independent clinics do not carry. Facility fees help sustain those obligations. Eliminating payment recognition for these costs does not make them disappear; it simply shifts financial pressure elsewhere in the system.
Our concern is that site-neutral payments flatten distinctions that are operationally meaningful, even when they are politically inconvenient.
Payment Predictability Enables Investment
Healthcare infrastructure does not attract capital on uncertainty alone. Predictable reimbursement allows investors to deploy capital into buildings, technology, workforce development, and service expansion with confidence that those investments can be sustained.
When CMS introduces payment changes that reduce reimbursement based solely on ownership structure, it alters the assumptions underlying existing investments. That has consequences beyond investor returns. It affects expansion plans, service lines, and the willingness to invest in marginal communities.
This is not about protecting excess. It is about preserving the conditions required to maintain access and continuity of care.
Access and Stability Are Intertwined
We are often told that site-neutral payments will not affect access. That assertion assumes hospitals can absorb revenue reductions without altering operations. In practice, outpatient margins support inpatient services that are essential but financially challenging.
When those margins shrink, hospitals respond by delaying upgrades, reducing hours, or consolidating services. These decisions are rarely visible in policy models, but they are immediate at the operational level.
From an investor standpoint, stability matters because instability leads to retrenchment. Retrenchment leads to fewer options for patients.
Private Capital Is Not the Opposite of Public Interest
Private equity has been portrayed as uniquely dependent on payment differentials. The reality is that private capital has often stepped into environments where public funding alone was insufficient to modernize facilities or expand care capacity.
We do not oppose efficiency. We support payment models that reward value and outcomes. What we caution against are blunt instruments that assume identical pricing produces identical consequences.
Healthcare systems are complex. Payment policy should reflect that complexity rather than simplify it away.
A Call for Policy Alignment, Not Reversal
Our position is not that CMS should abandon site-neutral payments entirely. It is that implementation should recognize legitimate cost differences and avoid destabilizing existing care networks.
We welcome dialogue with CMS and lawmakers to refine policy in a way that balances cost containment with system sustainability. Reform works best when it aligns incentives rather than compresses them indiscriminately.
Private equity remains committed to investing in healthcare delivery. That commitment depends on policies that acknowledge how care is actually delivered, funded, and sustained over time.
