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Private Equity Ownership Leads to Lower Quality, Higher Costs

Analysis  |  By Jay Asser  
   July 26, 2023

Researchers synthesized individual studies to review the impacts of private equity ownership across healthcare settings.

Private equity ownership in healthcare more often than not negatively affects quality of care and costs to patients or payers, according to analysis published in The BMJ.

With private equity ownership accelerating across healthcare settings in recent years, researchers attempted to measure the impact by systematically reviewing and synthesizing 55 individual studies between 2000 and 2023.

Of the 27 studies that assessed quality, 12 found harmful impacts, three found beneficial impacts, nine found mixed impacts, and three were neutral.

When it came to measuring costs to patients or payers, researchers observed the most consistent pattern across all the impacts. Of the 12 studies examined, nine showed increased costs, three found no differences, and zero showed lowered costs.

Studies on health outcomes, meanwhile, produced no definitive conclusions, researchers said. Of the eight studies used, two found beneficial impacts, three found harmful impacts, and three were neutral.

Though arguments in favor of private equity ownership point to firms improving the acquired company's value through operational and financial changes, researchers stated that these changes often result in increased costs to patients and payers.

"The fact that no consistently positive effects of PE in healthcare were identified also provides an evidentiary basis to remain cautious about claims that PE ownership is a self-evident benefit to healthcare provision," the authors wrote.

The analysis also found a "noticeable influx" of private equity ownership in the past 10 to 15 years, with nursing homes the most common setting for growth. That was following by dermatology, ophthalmology, hospital settings, and general physician groups.

A recent report by the American Hospital Association revealed that private equity makes up the overwhelming majority of physician acquisition at 65%, ahead of physician groups (14%), insurers (11%) and hospitals and health systems (4%).

The full effects of private equity ownership, however, may not be known for some time, researchers of the study published in The BMJ stated.

Even though the analysis only captures a short time before and after private equity ownership, "the current body of evidence is robust enough to confirm that PE ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting, and possibly increased regulation."

Jay Asser is the contributing editor for strategy at HealthLeaders. 


Analysis published in The BMJ examines 55 individual studies on the effects of private equity ownership between 2000 and 2023 to measure its impact on quality, cost, and outcomes.

Twenty one of the 27 studies that assessed quality found some form of harmful impact, while nine of the 12 studies that looked at costs to patients or payers showed increased costs.

Researchers also observed a trend of growing private equity ownership in the past 10 to 15 years, with nursing homes the most common setting for increased ownership.

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