What Happened After Private Equity Bought A Hospital?

Private Equity sign getty

Private equity in healthcare has faced substantial criticism, recently fueled by the bankruptcy of Steward Health , a hospital chain once owned by a private equity firm. In response, several states have passed—or are considering —laws to restrict private equity’s involvement in healthcare. But a new study published in the Journal of Financial Economics offers a more nuanced picture.

Three finance professors conducted the most comprehensive and rigorous analysis of private equity’s effects in healthcare to date, examining more than a thousand hospital acquisitions over a 19-year span. Their analysis, which includes seven figures, thirteen tables, six appendices, and nearly 25,000 words, revealed three main findings.

First, there is no evidence that