A new study reported that private equity (PE) firms tend to buy hospitals with less debt than their counterparts. Hospitals acquired by PE firms between 2005 and 2018 had significantly less debt than control hospitals. However, there was no significant difference in financial metrics or clinical outcomes before acquisition. Critics argue that PE firms harm hospitals through layoffs and cost-cutting. Cerberus Capital Management’s purchase of Steward Health Care’s hospitals resulted in bankruptcy and closures. Although PE firms claim to save distressed hospitals, evidence suggests they may prioritize financial gain over quality of care. Policymakers are urged to scrutinize PE ownership of hospitals.
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Do Private Equity Firms Really Save Troubled Hospitals?
