Key Takeaways
- • PE-owned hospitals adopted health AI at 31.4%, on par with nonprofit hospitals at 34%, while non-PE-owned for-profit hospitals lagged at just 8.6%, according to a Health Affairs Scholar study.
- • For clinical or operational AI, the probability of adoption was 33.3% for PE-owned hospitals, 32.4% for nonprofit hospitals, and 8.8% for non-PE for-profit hospitals.
- • The study sample covered 4,305 U.S. hospitals, including 224 PE-owned, 417 non-PE for-profit and 3,664 nonprofit facilities, drawn from a PE acquisitions and exits database linked to the 2024 American Hospital Association Annual Survey.
- • Researchers attribute the gap to clinical AI offering more immediate returns than operational tools, noting prior evidence that PE-acquired hospitals added revenue-generating technologies such as robotic surgery and digital mammography.
- • The authors caution that the findings are a "preliminary empirical basis" and that prior research has linked PE hospital acquisitions to higher rates of hospital-acquired conditions.
Summary
A new study published in Health Affairs Scholar finds that hospitals owned by private equity firms adopt health AI at higher rates than non-PE-owned for-profit hospitals, with adoption levels roughly matching those of nonprofit facilities. The research, which draws on a database of PE acquisitions and exits and the 2024 American Hospital Association Annual Survey, covers 4,305 hospitals, of which 224 were PE-owned, 417 were for-profit but not PE-owned, and 3,664 were nonprofit, including government hospitals. According to the study, more than 400 U.S. hospitals are owned by PE firms, representing 27% of all for-profit hospitals, citing data from the Private Equity Stakeholder Project.
Overall AI adoption was 31.4% at PE-owned hospitals and 34% at nonprofit hospitals, compared with 8.6% at non-PE-owned for-profit hospitals. The probability of adopting clinical or operational AI followed a similar pattern, at 33.3% for PE-owned hospitals, 32.4% for nonprofit hospitals and 8.8% for non-PE for-profit hospitals. Operational AI adoption varied little across the three groups, while clinical AI adoption tracked overall adoption, with PE-owned and nonprofit hospitals performing similarly and both ahead of other for-profit hospitals.
The study also examined barriers. Nonprofit hospitals were more likely than PE-owned hospitals to cite cost and resource challenges, while PE-owned hospitals were more likely than non-PE for-profit hospitals to cite staff-training challenges. The authors suggested that clinical applications may deliver more immediate returns than operational ones, noting that "prior evidence that PE-acquired hospitals selectively added robotic surgery and digital mammography suggests that revenue-generating clinical technology, rather than revenue-cycle automation, is where acquisition capital is directed." They described their results as a "preliminary empirical basis for evaluating the claim that PE investments drive technological improvements in health care."
The article notes that the broader research record on PE healthcare ownership is mixed. A 2024 study linked PE acquisitions of hospitals to increases in hospital-acquired conditions, including falls and central line-associated bloodstream infections. A federal inquiry into PE firms Apollo Global Management and Leonard Green & Partners also concluded that they prioritized investor returns over the wellbeing of patients and providers at acquired hospitals.
To better align investor incentives with technology adoption, the researchers recommended that regulators link payments more directly to technology-enabled quality improvements, require public reporting of technology adoption alongside patient experience and safety metrics, and consider minimum technology investment requirements beyond AI as conditions for approving PE acquisitions.
Overall AI adoption was 31.4% at PE-owned hospitals and 34% at nonprofit hospitals, compared with 8.6% at non-PE-owned for-profit hospitals. The probability of adopting clinical or operational AI followed a similar pattern, at 33.3% for PE-owned hospitals, 32.4% for nonprofit hospitals and 8.8% for non-PE for-profit hospitals. Operational AI adoption varied little across the three groups, while clinical AI adoption tracked overall adoption, with PE-owned and nonprofit hospitals performing similarly and both ahead of other for-profit hospitals.
The study also examined barriers. Nonprofit hospitals were more likely than PE-owned hospitals to cite cost and resource challenges, while PE-owned hospitals were more likely than non-PE for-profit hospitals to cite staff-training challenges. The authors suggested that clinical applications may deliver more immediate returns than operational ones, noting that "prior evidence that PE-acquired hospitals selectively added robotic surgery and digital mammography suggests that revenue-generating clinical technology, rather than revenue-cycle automation, is where acquisition capital is directed." They described their results as a "preliminary empirical basis for evaluating the claim that PE investments drive technological improvements in health care."
The article notes that the broader research record on PE healthcare ownership is mixed. A 2024 study linked PE acquisitions of hospitals to increases in hospital-acquired conditions, including falls and central line-associated bloodstream infections. A federal inquiry into PE firms Apollo Global Management and Leonard Green & Partners also concluded that they prioritized investor returns over the wellbeing of patients and providers at acquired hospitals.
To better align investor incentives with technology adoption, the researchers recommended that regulators link payments more directly to technology-enabled quality improvements, require public reporting of technology adoption alongside patient experience and safety metrics, and consider minimum technology investment requirements beyond AI as conditions for approving PE acquisitions.
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