A growing body of research reveals that hospitals owned or operated by private equity firms are showing worrying trends such as increased medical complications, declines in patient satisfaction, and elevated mortality rates, according to a new report.
“Private equity seems to really focus on one exclusive goal to the exclusion of everything else, and that is to make money,” said Peter Pitts, the president of the Center for Medicine in the Public Interest, which published the report, “Barbarians at the Hospital Gates: Private Equity and its Impact on Patient Care.”
Over the last two decades, private equity investment in U.S. hospitals has surged, with more than $1 trillion flowing into the broader healthcare industry. Currently, about 20 percent of for‑profit hospitals are owned or managed by PE firms, according to the report. These firms often acquire hospitals through leveraged buyouts, using minimal equity and loading the institution with debt that ultimately secures its own assets. High-profit specialties, aggressive cost-cutting and revenue enhancement are common strategies once ownership changes hands.
While private equity ownership can bring capital and operational discipline to financially struggling hospitals, the evidence suggests that many hospitals suffer in terms of patient care once acquired:
—A study of more than 4 million Medicare hospitalizations from 2009 to 2019 found that adverse events rose sharply in private-equity-owned hospitals: falls increased by 27 percent, central-line associated bloodstream infections increased by 38 percent, surgical site infections doubled, although there was a decline in central-line placements.
—Another study showed that patients admitted for emergency surgeries at private-equity hospitals had a 42 percent higher 30-day mortality, compared with similar surgeries at non-private-equity-owned hospitals.
—Patient experience also worsened. Overall hospital ratings and willingness to recommend dropped 2 to 3 percentage points in the first years after acquisition, with steeper declines over time in responsiveness of staff and other domains.
The report draws attention to broader consequences such as understaffing, cuts to services and safety violations, which appear to be more common in private-equity-owned systems. Hospitals owned by private equity also seem more likely to shutter or underdeliver care, particularly affecting rural and minority communities. And transparency is limited: ownership changes, debt obligations and cost‑cutting measures are often not public, raising concerns over accountability.
“Insurance companies at least pretend their decisions are based on providing quality healthcare,” Pitts said. “Private equity doesn’t even pretend; it’s profit first, and everything else is secondary. It shows tremendous disrepute to doctor, nurses, physical plant maintenance, etc. These people are busting their chops every day on behalf of patients, and yet management — in combination with private-equity capital that they’ve looked for — is selling them out.”
Supporters of private equity counter that in many cases, the outside investment provides much-needed capital to hospitals at risk of financial collapse, enabling modernization or even saving facilities from closure.
A February 2024 report, “A Partner to Health Care: How Private Equity Complements and Strengthens the Health Care Industry” from the American Investment Council, argued that the targeted investments not only improve healthcare but that the firms themselves are becoming more knowledgeable and proficient at making good investments.
“They know exactly where their capital is most useful, whether it involves expanding a physician practice into rural communities, financing innovative medical devices, increasing medical supplies, or financing promising new drug candidates that can treat hundreds of diseases,” wrote American Investment Council president and CEO Drew Maloney in the report’s introduction. The report noted that many private equity firms bring in doctors and other experts, leveraging their knowledge and experience to improve healthcare outcomes.
Through 2022, private equity had invested $108 billion in healthcare, which represented 11 percent of all private-equity investments.
Maloney wrote a column published by AlphaWeek in July 2023 that nearly 80 percent of rural counties in the United States are “medical deserts,” requiring people to travel extensively for routine appointments and care. Private equity invested $15 billion into more than 250 urgent care clinics, which are often found in rural communities, as of 2020, he wrote.
“Unfortunately, few medical practices today possess the capital on hand to upgrade services, renovate facilities and modernize their practice,” Maloney wrote. “Private equity has played a key role in providing medical practices with capital to strengthen services, and research has shown that it has enhanced care.”
Private-equity firms have also helped shepherd dozens of lifesaving drugs to market and invested in clinical trials for hundreds of drug therapies and solutions for various cancers, HIV, migraines and infertility, Maloney noted. These trials and other steps required by the Federal Drug Administration can be cost-prohibitive, and Maloney wrote, “Hundreds of drug candidates can fall by the wayside without financial help.”
Still, according to the Center for Medicine in the Public Interest report, the preponderance of recent evidence indicates that declines in care quality, increased complications and patient harms often outweigh the benefits.
“While (private equity) can offer capital resources and management discipline for struggling hospitals, the preponderance of evidence reveals trends of compromised patient safety, poorer patient-reported experiences, higher costs and elevated postoperative mortality,” the report stated. “Generalizations should be tempered; benefits may exist in specific provider niches. Nonetheless, the risk to patient welfare is significant and warrants proactive regulation to ensure that financial objectives do not override care quality.”
