Hospital Behavior Over the Private Equity Life Cycle

Abstract

Private equity is an increasing presence in US healthcare, with unclear consequences. Leveraging unique data sources and difference-in-differences designs, we examine the largest private equity hospital takeover in history. The affected hospital chain sharply shifts its advertising strategy and pursues joint ventures with a rival industry. Inpatient throughput is increased by allowing more patient transfers, and crucially, capturing more patients through the emergency department. The hospitals also avoid births while managing shorter, less treatment-intensive stays for non-pregnancy-related admissions. Outpatient surgical care volume declines, but remaining cases focus on higher complexity procedures. Importantly, behavior changes persist even after private equity divests.