Staffing and clinical impacts of private equity acquisition of hospitals

1. In this matched difference-in-differences analysis, hospitals acquired by private equity firms had lower hospital-wide salary expenditures compared with hospitals not acquired by private equity.

2. Compared with non-private equity hospitals, private equity hospitals also experienced increased emergency department mortality and transfers to other acute care hospitals post-acquisition.

Evidence Rating Level: 2 (Good)

Study Rundown: Several hundred hospitals are currently owned by private equity firms, a transition which has been associated with increased hospital charges, income, and hospital-acquired adverse events. Staff reductions may increase returns to investors while leading to reduced quality of care; however, the impact of private equity acquisition on hospital staffing has not been well-characterized. This study aimed to assess changes in hospital staffing, salary expenses, and patient outcomes resulting from private equity acquisition. Following acquisition, private equity hospitals reduced overall salary expenditures, including emergency department (ED) and intensive care unit (ICU) salary expenditures, by over fifteen percent compared with non-private equity-acquired hospitals. Private equity hospitals also reduced full-time employees by over ten percent. Patients in EDs of private equity hospitals experienced higher in-hospital mortality and a greater rate of transfers to other acute care hospitals compared with those at non-private equity hospitals. ICU patients at private equity hospitals were also more likely to be transferred compared to those at non-private equity hospitals, but there was no significant difference in average short-term mortality in the ICUs between private equity and non-private equity hospitals. The generalizability of this study is limited by a restrictive sample of private equity hospitals, a population confined to traditional Medicare beneficiaries, a short follow-up period, and potential unmeasured confounding. Nevertheless, these findings suggest that private equity acquisition of hospitals may lead to reduced staffing and some worse patient outcomes, underscoring the impact of cost-cutting on clinical care.

Click to read this study in AIM

Relevant Reading: Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

In-Depth [retrospective cohort]: This matched difference-in-differences analysis aimed to determine the impact of private equity acquisition of hospitals on hospital staffing, salary expenses, and patient outcomes. Acquisitions took place between 2010 and 2017, and hospitals were followed up to 3 years pre-acquisition through 3 years post-acquisition. Each of 49 private equity hospital was matched to up to 8 hospitals acquired by non-private equity firms in the same year, yielding a total of 293 control hospitals. In adjusted analyses, private equity hospitals on average reduced ED salary spending from $69.37 to $65.96 per inpatient bed day post-acquisition, while control hospitals increased salary spending from $81.59 to $89.03, corresponding to a differential reduction of -$12.63 (95% CI, -$22.74 to -$2.52; p = 0.015). Private equity hospitals also reduced their ICU salary spending from $53.25 to $48.90 per inpatient bed day, while control hospitals raised this spending from $57.53 to $60.39, resulting in an adjusted differential reduction of -$8.46 (95% CI, -$13.21 to -$3.72; p < 0.001). Adjusted analyses also showed a differential reduction of -1.6 full-time employees per 1000 available inpatient bed days (95% CI, -2.5 to -0.7 full-time employees). Total salary spending also decreased from $1057 per inpatient bed day to $994 in private equity hospitals and increased from $1249 to $1344 in control hospitals, corresponding to a differential reduction of -$176 (95% CI, -$233 to -$119). For in-hospital mortality among ED patients, adjusted analyses showed a differential increase of 7.0 deaths (95% CI, 1.8 to 12.3 deaths; p = 0.009) per 10,000 visits. Adjusted analyses showed an increase of 0.1 percentage points (95% CI, 0.04 to 0.18 percentage points, p = 0.002) for transfers of ED patients to other acute care hospitals, and an increase of 0.47 percentage points (95% CI, 0.18 to 0.74 percentage points; p = 0.024) for transfer of ICU patients to other acute care hospitals. No differential changes were found in average in-hospital, 7-day, or 30-day mortality at private equity hospital ICUs. Overall, this study suggests that private equity acquisitions of hospitals may lead to reduced salary expenditures, increased ED mortality, and increased transfers to other acute care hospitals.

Image: PD

©2025 2 Minute Medicine, Inc. All rights reserved. No works may be reproduced without expressed written consent from 2 Minute Medicine, Inc. Inquire about licensing here. No article should be construed as medical advice and is not intended as such by the authors or by 2 Minute Medicine, Inc.