Private equity ownership of hospitals is facing renewed criticism after high-profile failures like Steward Health Care's bankruptcy and the recent firing of emergency physicians at Valley Health in Virginia. Proponents argue that private equity can make facilities more efficient and provide access to capital, but critics contend that the drive for quick returns can weaken hospitals over the long term. A 2024 American College of Physicians survey found that only 10% of physicians viewed private equity involvement in healthcare positively.
The typical playbook, as described by the watchdog Private Equity Stakeholders Project and a MedPAC report, involves buying a hospital with a small amount of equity and a large amount of borrowed debt, which is then assumed by the hospital. The goal is to improve financial performance and sell the facility for a substantial profit. Economist Eileen Appelbaum says this debt "drives a lot of the poor quality care in private equity-owned facilities," leading to staffing reductions and less attention to safety. A Harvard expert similarly called the incentive structure fundamentally "at odds with doing what's best for patient care."
The source notes that Harvard researchers found patient satisfaction declined after private equity took over hospitals, using a difference-in-differences analysis. The article also highlights the Steward case, where nurses described severe understaffing and missing supplies while the private equity firm Cerberus made an estimated $800 million profit. The source presents both proponent and critic views, but the evidence it cites leans heavily toward concerns about patient impact. No other sources were provided{