Private Equity Investment and Social Work: Ethical Issues

Archives > Volume 21 (2024) > Issue 2 > Item 06

DOI: 10.55521/10-021-206

Frederic G. Reamer, Ph.D.
Rhode Island College
freamer@ric.edu

Reamer, F. (2024). Private Equity Investment and Social Work: Ethical Issues. International Journal of Social Work Values and Ethics, 21(2), 42-63. https://doi.org/10.55521/10-021-206

This text may be freely shared among individuals, but it may not be republished in any medium without express written consent from the authors and advance notification of IFSW.

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Abstract

Historically, social work services in the U.S. have been funded by a complex array of public-sector (government) and private-sector funds. A significant percentage of human and social services are sponsored by private equity investors. Private equity entails investment partnerships that use venture capital to buy and manage companies before selling them for profit. Extensive research documents significant abuses and fraud perpetrated by a subset of programs supported or sponsored by private equity investors. The prevalence of private equity investment in human and social services raises fundamental questions about possible clashes with core social work values and ethical standards. The purpose of this article is to provide an overview of private equity investment in human and social services; identify potential benefits and risks that have ethical implications; explore the extent to which private equity investment aligns with core social work values; and use the NASW Code of Ethics to guide social workers’ efforts to address ethics challenges associated with private equity investment, especially related to issues of informed consent; conflicts of interest and client referral; profess-sional integrity; administration and practitioners’ commitments to employers; unethical conduct of colleagues; dishonesty, fraud, and deception; and social injustice, anti-racism, and social and political action.

Keywords: Ethics, financing, policy, private equity investment, values

Historically, social work services in the U.S. have been funded by a complex array of public-sector (government) and private-sector funds. Some services rely entirely on public-sector funds (federal, state, county, municipal), some rely entirely on private-sector funds (such as private insurance, foundation, and client self-pay), and some rely on a mix of public- and private-sector funds (Jansson, 2019; Specht & Courtney, 1994).

In the private-sector realm, many social and human service programs depend on funds provided by private equity investors (Cendrowski et al., 2012; Kotz, 2015; Morrell & Clark, 2010). Yet, the ethical implications of private equity funding of social work services has not been addressed in the profession’s literature. Indeed, a comprehensive search of prominent academic databases (Academic Search Complete, EconLit, PsycINFO, SocINDEX) yielded no publications on the subject of private equity funding of social work services.

In-depth analyses of private equity investment make clear that there may be some benefits to this funding model, along with significant and troubling downsides that run counter to core social work values (Kotz, 2015). The purpose of this article is to review the nature of private equity investment; assess its potential benefits and untoward consequences; explore the relationship between private equity investment and core social work values and ethics standards; and use the NASW Code of Ethics (2021) to guide social workers’ efforts to address ethics challenges associated with private equity investment. 

Private Equity Investment: An Overview

Private equity investment entails partnerships that use venture capital to buy and manage companies before selling them. Investors, many of whom have high net worth, may be required to commit capital for long periods of time. Often, private equity firms manage their portfolio companies to increase their worth or to extract value before selling the investment years later, ideally for a significant profit. By the time a private equity firm acquires a company, it typically has a plan in place to increase the investment’s worth. That could include dramatic cost cuts or a restructuring, steps the company’s incumbent management may have been reluctant to take (Cendrowski et al., 2012; Kotz, 2015; Morrell & Clark, 2010).

In the U.S., private-sector investments to support a joint venture date as far back as the Industrial Revolution, when merchant bankers financed such ambitious enterprises as the Transcontinental Railroad, Western Union, Erie Railroad, Union Pacific, and Carnegie Steel Company, among others (Cendrowski et al., 2012). Private equity investment is one key element in the broader role of privatization in human services. Privatization incorporates business principles, methods, and goals into human services and behavioral health organizations. For some of these entities, although not all, profit is a principal aim (Healy, 2002; Kotz, 2015; Wilby, 2008; Zelnick & Abramovitz, 2022).

Private Equity in Human Services and Behavioral Health

Private equity investment in human services and behavioral health is widespread, primarily in the U.S. (DeAngelis, 2022, 2023; O’Grady, 2022). In recent years, venture capital has been invested heavily in outpatient behavioral health offices, psychiatric facilities, telehealth platforms for online therapy, psychotropic drugs, self-help smartphone apps, and other digital tools (DeAngelis, 2022, 2023). Behavioral health startups recently reached private valuations exceeding $1 billion. From 2020 to 2021, the number of behavioral-health acquisitions jumped more than 35% to 153; of those, 123 involved private-equity firms (Lovett, 2022; Safdar & Zuckerman, 2022). Investors invested an estimated $5.5 billion into mental health technology startups globally in 2021, up 139% from 2020 (Safdar & Zuckerman, 2022). In the first three quarters of 2022, private equity deals made up more than 60% of behavioral health transactions (Lovett, 2022). Here are prominent examples, listed chronologically, of private equity firms’ ambitious investment in human services and behavioral health programs that employ social workers (Lovett, 2022):

  • In 2007, Health Enterprise Partners (HEP) invested in Nashville-based Behavioral Health Centers of America (BCA). In 2021, HEP invested in fast-growing at-home addiction treatment company Aware Recovery.
  • In 2011, Webster Equity Partners invested in substance use disorder provider Discovery Behavioral Health. The provider operates more than 145 treatment centers.
  • In 2012, Lee Equity invested in Eating Recovery Center. The provider treats people with eating disorders including anorexia, bulimia, binge eating disorder, and other eating disorders. In 2017, Lee Equity sold the provider to CPP Capital advisors.
  • In 2014, Shore Capital invested in autism and behavioral health provider The Stepping Stones Group.
  • In 2015, Webster Equity Partners announced the acquisition of addiction care provider BayMark Health. It has more than 400 treatment facilities in 37 states and three Canadian provinces. BayMark claims to be the largest provider of opioid use disorder treatment in the U.S.
  • In 2018, global private equity investment firm KKR formed Applied Behavioral Analysis (ABA) provider BlueSprig to address the clinical need of pediatric patients diagnosed with autism spectrum disorder.
  • In 2021, KKR announced the creation of a new mental health service company called Geode Health. The company partners with behavioral health providers to offer in-person and virtual outpatient mental health treatment to adults and children. It uses digital tools to help track measurement-based care.
  • In 2021, the Thurston Group collaborated with outpatient mental health provider Advanced Recovery Concepts to form a new mental health platform called ARC Health.
  • In 2022, KKR invested in Brightline, which provides virtual behavioral health care for children, teens and families. The company is valued at roughly $705 million.

Venture capital groups are also investing in the development of smartphone apps and online software tailored to behavioral health. Some apps and software are geared to specific client populations, such as people of color and Indigenous people, LGBTQI+ individuals, and people with serious mental illness. For example, the venture capital firm Telosity has been funding youth-focused apps and technologies; this firm estimates that by 2027, technologies and startup companies related to youth mental health will be worth $26 billion (DeAngelis, 2023).

Private equity investment and stock market investment have been especially prominent in residential treatment programs. For example, as of November 2022, Acadia Healthcare operated a network of 246 behavioral healthcare facilities—including inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers, and outpatient clinics—with approximately 10,800 beds in 39 states and Puerto Rico (O’Grady, 2022). Investors can track the company’s share price on the NASDAQ stock market composite index. The GEO group specializes in the design, development, and delivery of services for private correctional facilities, immigration processing centers, rehabilitation, and other community-based programs. Investors can track the company’s share price on the New York Stock Exchange.

Family Help & Wellness (FHW) runs wilderness therapy, residential treatment, and transition programs for teens. FHW provides private pay behavioral health services for adolescents and young adults with 20 programs and almost 800 employees across six states: Utah, Arizona, New Mexico, North Carolina, Idaho, and Colorado. Family Help & Wellness is owned by private equity firm Trinity Hunt Partners (O’Grady, 2022).

Sevita, formerly the Mentor Network, serves adults and children with intellectual and development disabilities, people recovering from brain injury, children in foster care, and adults and children with autism, among others. Private equity firm Madison Dearborn Partners is a significant investor (Larson, 2022). In 2017, Sequel Youth and Family Services was acquired by Altamont Capital Partners, a private equity firm with over $4.3 billion of capital under management (O’Grady, 2022).

Abusive Practices and Preferential Tax Benefits

Proponents of private equity investment tout several potential benefits, especially related to funding innovations, enhanced management practices, streamlined costs, and nimble flexibility in complex labor markets (Cendrowski et al., 2012; Kotz, 2015). Indeed, there is evidence that private equity investment in behavioral health services has greatly expanded options and choices for people who seek assistance by incentivizing development of smartphone apps, online platforms, and virtual services that clients can access outside of traditional office-based services and operating hours (DeAngelis, 2022, 2023). 

However, critics argue that private equity investment can greatly reduce the availability and quality of care and services provided to clients and, in egregious instances, lead to fraud and profound harm (Cendrowski et al., 2012; Kotz, 2015; O’Grady, 2022). Profit-seeking can incentivize personnel and service-delivery cuts to reduce costs. In residential programs, profit-seeking can incentivize recruiting clients who are not appropriate for or in need of the services offered, extending lengths of stay beyond what is clinically warranted or necessary to enhance revenue, and relying on unlicensed staffers to cut personnel costs. A significant number of programs funded with venture capital are unregulated (O’Grady, 2022; Szalavitz, 2006). With regard to programs for youth operating under the auspices of private equity investment, O’Grady (2022) argues that

Private equity’s track record for investing in youth behavioral services is troubling. A pattern of harmful conditions, often related to insufficient staffing and other cuts to expenses, suggests that private equity firms’ focus on maximizing profit over short periods of time may come at the cost of children’s and teen’s safety and well-being. Despite horrific conditions at some youth behavioral health companies, their private equity owners have in some cases reaped massive profits. (p. 21)

In theory, abusive practices can occur in any social service program, regardless of funding sources and whether they are for-profit or non-profit entities. Indeed, some non-profit programs have been linked with notorious abuses (Alberstein & Davidovitch, 2011; Diedrich & Chen, 2022; Reamer, 2021; Szalavitz, 2006). However, extensive research documents significant abuses perpetrated by some programs supported or sponsored by private equity investors (O’Grady, 2022; Reamer, 2021; Reamer & Siegel, 2008; Szalavitz, 2006). Examples in the U.S. include:

  • Aspen Education Group was owned by Bain Capital’s CRC Health Group, which acquired Aspen in 2006 and held it until 2015, when CRC was acquired by publicly traded Acadia Healthcare. Aspen ran boarding schools, wilderness therapy programs, special needs summer camps, residential treatment facilities, and weight loss programs for youth. Throughout its almost two decades of private equity ownership under various firms, Aspen faced scrutiny for numerous reports of abuse and neglect at its programs. By the time Bain acquired Aspen, the company already faced allegations of abuse and wrongful death of teenage clients after eight years of ownership by private equity firms the Sprout Group, Frazier Healthcare, and Warburg Pincus. Under Bain, these allegations continued until Acadia acquired the company in 2015 and many of its programs were closed, sold, or rebranded (“CRC Health Group,” 2014; Stewart, 2007).
  • In 2009 the state of Oregon shut down Aspen’s Mount Bachelor Academy, a boarding school for struggling teens, following an investigation by the state’s Department of Human Services. The investigation found that students were subjected to sleep deprivation, strenuous work projects, and sexualized role-play in front of peers and adults. In three lawsuits, a total of 51 former students alleged abuse by Mount Bachelor and Aspen. The cases were settled out of court (O’Grady, 2022; Withycombe, 2020).
  • In 2009 the state of Oregon Department of Human Services shut down Aspen’s SageWalk Wilderness School in Hampton, Oregon after a 16-year-old boy died of a heat stroke while on one of the program’s rigorous wilderness hikes (Jung, 2019).
  • Equinox, Family Help & Wellness’s boys residential treatment center in Hendersonville, North Carolina has been cited numerous times for violations, including a 2021 investigation that cited the company for inadequate training for staff, having unlicensed staff distributing medications, and failing to maintain the facility in a safe and clean manner (O’Grady, 2022).
  • A 2017 investigation by the U.S. Senate Committee on Finance found that at least 86 children died in a 10-year period while in the custody of Mentor (between 2005 and 2014). In only 13 of those deaths did the company reportedly conduct an internal investigation (Roston & Singer-Vine, 2017).
  • Sequel’s Northern Illinois Academy relinquished its license and closed in 2021 following an investigation by a state-appointed monitor finding accusations of battery, isolation, sexual assault, improper restraint, and compliance failures (Wurst, 2021).
  • In May 2020, a 16-year-old resident at Sequel-operated Lakeside Academy in Michigan was killed after being restrained by seven staffers for 12 minutes while he struggled to breathe. An investigation by NBC News found records showing that the State of Michigan had substantiated 56 violations at Lakeside Academy since 2018, including multiple instances of inappropriate physical restraints (O’Grady, 2022).
  • In December 2020, Sequel Pomegranate in Ohio relinquished the license to its residential behavioral treatment center under the threat of revocation by the state. Ohio regulators found recurring incidents of violent assaults, neglect, and improper restraints of children. As of September 2021, the facility closed permanently (Haeberle, 2021).

Another frequent focus of controversy addresses a macro or public policy issue pertaining to what is known as the carried interest provision in U.S. tax law that allows private equity managers to be taxed at the lower capital gains tax rate on the bulk of their compensation. This provision can make private equity investments in human and social services particularly appealing. Carried interest is a form of compensation paid to investment executives like private equity and venture capital managers. The managers receive a share of the fund’s profits—typically 20% of the total—which is divided among them proportionally. The profit is called carried interest, also known as “carry” or “profits interest.” That money is considered a return on investment; managers pay a top 20% federal tax rate on those profits, rather than regular federal tax rates of up to 37% that apply to compensation paid as a wage or salary.

That preferential 20% tax rate is the same as “long-term capital gains,” which applies to investments like stocks, bonds, mutual funds and real estate held for more than a year. Carried interest accounts for the vast majority of compensation paid to managing partners of private equity funds (Iacurci, 2022). Legislative attempts to tax that compensation as income have not succeeded; in fact, this proposal was dropped from the Inflation Reduction Act of 2022.

Private Equity Investment and Fraud

Some private equity investments in behavioral health have been linked with allegations of significant, sometimes massive financial fraud. A prominent federal court case exposed the dark side of private equity investment in a large behavioral health organization that employed social workers and served large numbers of vulnerable low-income clients (Linton, 2021). This legal case is particularly noteworthy because it resulted in the largest settlement of its kind in the U.S. In 2021, private equity firm and former executives of South Bay Mental Health Center, Inc. (SBMHC) agreed to pay $25 million for allegedly causing fraudulent claims to be submitted to the Massachusetts Medicaid Program, known as MassHealth, for mental health services provided to clients by unlicensed, unqualified, and improperly supervised staff members at clinics across the state.

The Massachusetts Attorney General’s Office intervened in a lawsuit initially filed by a whistleblower and former SBMHC employee against SBMHC, a former Chief Executive Officer, and private equity entities H.I.G. Growth Partners, LLC and H.I.G. Capital, LLC, among others. H.I.G. Capital is a private equity firm, and H.I.G. Growth Partners is a subsidiary of H.I.G. Capital. Community Intervention Services Holdings, Inc. (C.I.S.), in turn, was formed and incorporated by H.I.G. Growth Partners. South Bay Mental Health Center, Inc. had operated mental health facilities across Massachusetts.

In legal circles, this is known as a qui tam case that involves allegations of “false claims” submitted by an organization to state and federal agencies for reimbursement. The federal False Claims Act (FCA) allows whistleblowers to bring lawsuits against organizations and individuals who defraud the government (many states have similar laws). Qui tam is the abbreviation for the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning “Who sues on behalf of the King as well as for himself.” In a qui tam action, a “relator” brings an action against a person or company on the government’s behalf. The government, not the relator, is considered the plaintiff. If the government succeeds, the relator bringing the suit receives a share of the award.

The whistleblower in this case claimed that she voiced concerns to administrators about supervision and hiring practices at SBMHC. She specifically asserted that she raised questions about unlicensed individuals receiving supervision from unlicensed clinicians, a practice which she believed to be in violation of the state’s MassHealth regulations. Several SBMHC employees attested that the organization had developed a policy of allowing licensed supervisors to review and sign off on the notes or charts of clinicians whom they were not directly supervising.

The Attorney General’s Office alleged that the clinics named in the complaint suffered significant gaps in licensing and supervision of therapists during the relevant time period. The Attorney General’s investigation revealed that SBMHC had a widespread pattern of employing unlicensed, unqualified, and unsupervised staff at its mental health facilities in violation of state law. According to the formal complaint filed by the Attorney General’s Office and the whistleblower, by submitting fraudulent claims to MassHealth for mental health services provided by unlicensed, unqualified, and unsupervised personnel, SBMHC violated the Massachusetts False Claims Act. MassHealth pays for mental health services provided to MassHealth members by qualified clinicians and counselors who are subject to certain licensure and supervision requirements. Mental health centers that employ those rendering mental health services must comply with certain core supervision requirements set out in applicable regulations.

This settlement resolved allegations that the defendants, including the private equity firms, knew that SBMHC was providing unlicensed, unqualified, and unsupervised services in violation of regulatory requirements and caused fraudulent claims to continue to be submitted to MassHealth by failing to adopt recommendations to bring SMBHC into compliance. Private equity firm HIG held a majority of seats on the company’s board of directors.[1]

Private Equity Investment and Social Work Values

The prevalence of private equity investment in human and social services raises fundamental questions about possible clashes with core social work values and standards that are central to the NASW Code of Ethics. Key questions concern the implications of private equity investment with respect to issues of informed consent; conflicts of interest and client referral; professional integrity; administration and social workers’ commitments to employers; unethical conduct of colleagues; dishonesty, fraud, and deception; and social injustice, anti-racism, and social and political action. What follows is an overview of the ways in which NASW Code of Ethics standards provide a constructive and tailored roadmap for social workers who want to address ethical concerns associated with private equity investment.

Informed Consent

Many human service and social service programs operated under the auspices of private equity groups employ social workers as clinicians, supervisors, and administrators (Reamer & Siegel, 2008; Zelnick & Abramovitz, 2020). When feasible, these practitioners have a moral obligation to explain to clients and potential clients the potential benefits and risks associated with their programs that may be linked with the private equity investment financing model (Reamer, 2024). According to the NASW Code of Ethics,

Social workers should provide services to clients only in the context of a professional relationship based, when appropriate, on valid informed consent. Social workers should use clear and understandable language to inform clients of the purpose of the services, risks related to the services, limits to services because of the requirements of a third-party payer, relevant costs, reasonable alternatives, clients’ right to refuse or withdraw consent, and the time frame covered by the consent. Social workers should provide clients with an opportunity to ask questions. (standard 1.03[a])

Informed consent is especially important when clients are mandated to enroll in programs (e.g., due to a court order). According to the NASW Code of Ethics, “in instances when clients are receiving services involuntarily, social workers should provide information about the nature and extent of services and about the extent of clients’ right to refuse service” (standard 1.03[d]). Admittedly, in some instances social workers would not be able to comply with this standard, for example, practitioners who work in for-profit prisons and immigration detention centers funded by venture capital. In these instances, clients do not have a right to refuse services (incarceration and detention) comparable to the right of clients who seek services voluntarily. However, within the prison or detention facility inmates and detainees may have a right to refuse certain elective services, such as counseling or participation in a substance use disorder treatment program.

Conflicts of Interest and Client Referral

Social workers may be employed in programs that seek to maximize profit for private equity investors. A profit motive may pressure social workers who have marketing and admission responsibilities to recruit clients whose needs may be better served by other programs and to extend clients’ lengths of stay unnecessarily to enhance revenue. Social workers are obligated to avoid such conflicts of interest. According to the NASW Code of Ethics,

Social workers should be alert to and avoid conflicts of interest that interfere with the exercise of professional discretion and impartial judgment. Social workers should inform clients when a real or potential conflict of interest arises and take reasonable steps to resolve the issue in a manner that makes the clients’ interests primary and protects clients’ interests to the greatest extent possible. In some cases, protecting clients’ interests may require termination of the professional relationship with proper referral of the client. (standard 1.06[a])

Social workers employed in programs under the auspices of private equity investors who have evidence that clients’ needs would be better served by other programs have an ethical obligation to refer them. According to the NASW Code of Ethics, “social workers should refer clients to other professionals when the other professionals’ specialized knowledge or expertise is needed to serve clients fully or when social workers believe that they are not being effective or making reasonable progress with clients and that other services are required” (standard 1.16[a]).

Professional Integrity

Social workers who consider employment opportunities in programs operating under the auspices of private equity firms should thoroughly assess the extent to which potential employers’ policies and protocols align with social work values and ethical standards. Social workers’ judgments about whether to accept employment in these settings are decisions of conscience. According to the NASW Code of Ethics, “social workers should not allow an employing organization’s policies, procedures, regulations, or administrative orders to interfere with their ethical practice of social work. Social workers should take reasonable steps to ensure that their employing organizations’ practices are consistent with the NASW Code of Ethics” (standard 3.09[d]) and “social workers should uphold and advance the values, ethics, knowledge, and mission of the profession” (standard 5.01[b]). Further, social workers should “monitor and evaluate policies, the implementation of programs, and practice interventions” (standard 5.02[a]).

Administration and Commitments to Employers

Social workers who have evidence that programs that employ them have policies and protocols that violate social work values and ethical standards because of private equity investment have a duty to bring their concerns to the attention of people in positions of authority and seek constructive change. This is especially important for social workers who serve in administrative positions, including in organizations that serve voluntary clients and those that serve involuntary (e.g., court-ordered) clients. According to the NASW Code of Ethics,

Social work administrators should take reasonable steps to ensure that the working environment for which they are responsible is consistent with and encourages compliance with the NASW Code of Ethics. Social work administrators should take reasonable steps to eliminate any conditions in their organizations that violate, interfere with, or discourage compliance with the Code. (standard 3.07[d])

More specifically, social workers who have evidence that colleagues are engaging in unethical conduct linked with private equity investment have a moral obligation to expose and challenge the misconduct and seek meaningful reform. According to the NASW Code of Ethics, “social workers who believe that a colleague has acted unethically should seek resolution by discussing their concerns with the colleague when feasible and when such discussion is likely to be productive” (standard 2.10[c]). Further, “when necessary, social workers who believe that a colleague has acted unethically should take action through appropriate formal channels (such as contacting a state licensing board or regulatory body, the NASW National Ethics Committee, or other professional ethics committees)” (standard 2.10[d]).

Dishonesty, Fraud, and Deception

Social workers employed in programs sponsored by private equity investors must be scrupulous in their efforts to avoid any participation in dishonest, fraudulent, and deceptive practices, especially related to marketing and recruitment (for example, when social workers are employed in residential treatment programs that actively seek clients who have generous insurance benefits or the ability to pay out-of-pocket). Social workers should not misrepresent employers’ policies and protocols or mislead potential clients with respect to the availability of services, quality of services, staffers’ qualifications and training, discipline protocols, and lengths of stay. According to the NASW Code of Ethics, “social workers should not participate in, condone, or be associated with dishonesty, fraud, or deception” (standard 4.04).

Social Injustice, Anti-racism, and Social and Political Action

Human service and social service programs supported by private equity investment seek to maximize profit. As a result, some programs limit themselves to clients whose services are covered by private health insurance policies with comprehensive benefits, whose reimbursement rates typically are higher than Medicaid reimbursement rates, or who have the ability to pay for services out-of-pocket (Artiga, Hill, & Damico, 2022; Harker, 2021; Yearby, Clark, & Figueroa, 2022). Social workers may be stymied in their efforts to locate quality services and programs for low-income clients of color who are not covered by generous health insurance benefits or who do not have the ability to pay for services out-of-pocket. Ideally, social workers would engage in assertive anti-racist and nondiscriminatory advocacy efforts to expand funding and coverage for this client population, directed especially at key stakeholders and policy officials in government agencies and those employed by private-sector insurers. According to the NASW Code of Ethics, “social workers should act to expand choice and opportunity for all people, with special regard for vulnerable, disadvantaged, oppressed, and exploited people and groups” (standard 6.04[b]). More specifically, “social workers should not practice, condone, facilitate, or collaborate with any form of discrimination on the basis of race, ethnicity . . .” (standard 4.02). 

Further, social workers have an ethical duty to prevent program-based abuses and to seek reasonable governmental oversight of programs sponsored by private equity investors. Meaningful legislation and regulation can go a long way toward preventing a wide range of financial, emotional, and physical abuses. For example, in 2021 social workers and other professionals collaborated with media personality, businesswoman, model, and entertainer Paris Hilton, a former client in a Utah residential program for struggling teens, to lobby successfully for legislation in that state designed to regulate and promote safety in programs for this client population.

Also, U.S. social workers and other advocates have collaborated with members of Congress to introduce federal legislation to enhance protections in such programs, many of which are supported by private equity investors. For example, legislation sponsored by U.S. Representative Ro Khanna of California and Senator Jeff Merkley of Oregon would create a bill of rights to protect youth who are in congregate care facilities. Those rights would include being protected from abuse and neglect, freedom from physical and chemical restraints, and the right to be free from abusive or traumatizing treatment by staff or other youth. The legislative proposal also emphasizes data collection and would make federal funding available for states to mend systemic issues (Miller & Fuchs, 2021). Social workers’ duty to engage in advocacy to prevent harm and injustice is cited throughout the NASW Code of Ethics’ mission statement, principles, and ethical standards.

Conclusion

Social work is unique among the helping professions in that the mission statement in the NASW Code of Ethics highlights explicitly practitioners’ responsibility to address the unique needs of people who are “vulnerable, oppressed, and living in poverty.” The research record documents that the proliferation of private equity investment in human and social services can limit the availability of services to vulnerable populations, especially populations of color, compromise the extent and quality of available services, and cause significant emotional, physical, and financial harm.

Key elements of the NASW Code of Ethics provide a much-needed roadmap for social workers who are concerned about possible detrimental ramifications of private equity investment in human and social services. The code highlights critically important ethical concerns, standards, and guidelines that social workers can use to prevent harm, advocate for needed reforms, and expand programmatic options, especially related to issues of informed consent; conflicts of interest; professional integrity; administration and practitioners’ commitments to employers; unethical conduct of colleagues; dishonesty, fraud, and deception; and social injustice, anti-racism, and social and political action.

Social work as a profession is uniquely positioned to identify and address challenges associated with private equity investment in human and social services. Social work’s venerable hallmark is its simultaneous concern about individual well-being and the environmental, structural, economic, and policy phenomena that affect people’s lives. Social work’s principal virtue is its sustained concern about individuals’ private troubles and the public issues that affect them. Indeed, that is the focus required to fully understand and confront potential harms caused by private equity investment in the human and social services. 

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[1] The author served as a publicly identified expert witness in this federal court case on behalf of the plaintiffs.