Private Equity in the Hospital Industry
58 Pages Posted: 20 Sep 2021 Last revised: 25 Feb 2022
Date Written: September 15, 2021
We examine employment and patient outcomes at hospitals acquired by private equity (PE) firms and PE-backed hospitals. While employment declines at PE-acquired hospitals, core medical workers (physicians, nurses, and pharmacists) increase significantly. The proportion of wages paid to core workers increases at PE-acquired hospitals whereas the proportion paid to administrative employees declines. These results are most pronounced for deals where the acquirers are publicly traded PE-backed hospitals. Non-PE-backed acquirers also cut employment but do not increase core workers or reduce administrative expenditures. Finally, PE-backed acquirers are not associated with worse patient satisfaction or mortality rates compared to their non-PE-backed counterparts.
Keywords: Private Equity, Hospital Acquisitions, Employment, Operational Efficiency, Real Patient Outcomes and Satisfaction
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