Key Takeaways
- • A landmark study published in the Journal of the American Medical Association found that private equity-acquired hospitals experienced a 15% decline in total capital assets within two years post-acquisition, while comparable non-PE hospitals saw a 9% increase—a net differential of 24 percentage points equivalent to $28 million in lost assets per hospital.
- • The research analyzed 156 hospitals acquired by private equity firms between 2010 and 2019, comparing them against 1,560 similar hospitals not acquired by PE, representing the first nationwide analysis of asset stripping patterns in PE-owned healthcare facilities.
- • Capital assets measured include land, buildings, major hospital equipment, and information technology infrastructure; researchers from UC San Francisco, Harvard Medical School, and CUNY's Hunter College documented that diminished asset levels persisted and widened five years after acquisition.
- • Dr. Stephanie Woolhandler, distinguished professor of public health at Hunter College and study co-author, directly challenged PE industry claims about capital infusion, stating the research demonstrates that private equity firms do not deliver the promised new capital into acquired hospital systems.
Summary
A comprehensive study published in the Journal of the American Medical Association on July 30, 2024, demonstrates that private equity acquisitions of hospitals correlate with significant reductions in institutional assets and resources available for patient care. Conducted by physician researchers from UC San Francisco, Harvard Medical School, and CUNY's Hunter College, the research represents the first nationwide analysis documenting systematic asset depletion following PE takeovers of healthcare facilities.
The study's quantitative findings are substantial. During the two-year period following private equity acquisition, hospitals experienced an average 15% decline in total capital assets, while comparable hospitals not acquired by PE saw their assets rise by an average of 9%. This 24-percentage-point differential translates to approximately $28 million in lost assets per hospital. Capital assets measured in the research include land, buildings, major hospital equipment, and information technology systems—core infrastructure essential for patient care delivery and operational capacity.
The research scope was considerable, analyzing 156 hospitals acquired by private equity firms between 2010 and 2019 and comparing their performance against a matched cohort of 1,560 similar-sized hospitals located in comparable communities that were not acquired by PE. The longitudinal analysis revealed that the pattern of asset diminishment not only persisted but widened when measured five years post-acquisition, suggesting the asset decline was neither temporary nor subject to recovery.
Dr. Stephanie Woolhandler, a study co-author and distinguished professor of public health at CUNY's Hunter College, characterized the findings as transformative for investor and policymaker perspectives on PE healthcare ownership. She directly contested industry messaging, stating: "The PE firms say, 'We bring new capital into hospitals.' It turns out that's not quite true." The research provides empirical evidence challenging a core value proposition typically presented by private equity firms entering the healthcare sector—that operational restructuring and external capital deployment enhance institutional capacity and financial health.
The study's quantitative findings are substantial. During the two-year period following private equity acquisition, hospitals experienced an average 15% decline in total capital assets, while comparable hospitals not acquired by PE saw their assets rise by an average of 9%. This 24-percentage-point differential translates to approximately $28 million in lost assets per hospital. Capital assets measured in the research include land, buildings, major hospital equipment, and information technology systems—core infrastructure essential for patient care delivery and operational capacity.
The research scope was considerable, analyzing 156 hospitals acquired by private equity firms between 2010 and 2019 and comparing their performance against a matched cohort of 1,560 similar-sized hospitals located in comparable communities that were not acquired by PE. The longitudinal analysis revealed that the pattern of asset diminishment not only persisted but widened when measured five years post-acquisition, suggesting the asset decline was neither temporary nor subject to recovery.
Dr. Stephanie Woolhandler, a study co-author and distinguished professor of public health at CUNY's Hunter College, characterized the findings as transformative for investor and policymaker perspectives on PE healthcare ownership. She directly contested industry messaging, stating: "The PE firms say, 'We bring new capital into hospitals.' It turns out that's not quite true." The research provides empirical evidence challenging a core value proposition typically presented by private equity firms entering the healthcare sector—that operational restructuring and external capital deployment enhance institutional capacity and financial health.
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