Private Equity in Healthcare

Ahoy! There be pirates out there! (Trigger warnings: death, drugs, and sexual assault)

Jolly Roger © Atman| Dreamstime.com

Once upon a time, all hospitals were not-for-profit.

They were started by religious and philanthropic organizations and physicians donated their services. Starting in the New York Almshouse in 1736, Bellevue Hospital is the oldest continuously operating hospital in the United States (U.S.), followed by Pennsylvania Hospital, founded by Benjamin Franklin and Dr. Thomas Bond in 1751. The Pennsylvania legislature granted the hospital a charter “to care for the sick-poor and insane who wander the streets of Philadelphia” (Penn Medicine, 2017, para 2).

Other philanthropic hospitals followed, including Sheppard Pratt, funded by the estate of Quaker merchant, Moses Sheppard, who envisioned “humane care for the mentally ill” (Sheppard Pratt, 2016) and the first federally “Government Hospital for the Insane”, St. Elizabeths, which cared for sick soldiers on both sides of the Civil War. Over time, with scientific discoveries (like wash your hands!) and improvements in medical care, hospitals evolved from the places where people went to die, to places where they were treated and released in better condition than when they arrived (for the most part).

In the United States, with the rise of employer-based health insurance, Medicare and Medicaid, not-for-profit hospitals began to compete with each other for revenue. There was as the expression goes, “gold in them thar hills!” Advertisements and marketing, once taboo in health care, became more commonplace. Now hospitals are “branded”, patients are “consumers”, consumer markets are “segmented”, and websites and social media serve as major strategies in hospitals’ communications (O’Sullivan et al., 2003; Rao, 2023; Vedel, Ramaprasad, & LaPointe, 2020).

Is it any surprise that for-profit corporations saw health care as an opportunity to get some of that cash? According to case study research from Collins, Gray, and Hadley (2001) conversions of not-for-profit hospitals to for-profit “surged in the early 1980s and then again in the mid-1990’s” (p. v). The authors indicated the reason for these conversions was “financial instability” (p. vi) and that in “six of their eight case studies, sale to a for-profit owner failed as a permanent solution to the financial decline of the hospital” (p. vii).

We now have a larger concern with a relatively new entrant to the health care scene, one that has a voracious appetite for nursing homes, physician practices, and hospitals: private equity (PE), or as I like to call them PIRATE EQUITY.

How many PE owned hospitals are there? A recent analysis of Centers for Medicare and Medicaid (CMS) data found that “nearly half of the 4,644 Medicare-enrolled hospitals are non-profit (49.2 percent), 36.1 percent are for-profit, and 14.7 percent are government-owned” (Welch et al, 2023, p. 1). Per a bipartisan Senate Budget Committee report (2025), CMS data “currently does not capture information on Private Equity Owned hospitals”; instead we must rely on a nonprofit organization Private Equity Stakeholder Project (PESP) for this data. Per PESP (2025, para. 1),

“Approximately 460 US hospitals are owned by private equity firms. That represents:

• 8% of all private hospitals;

• 22% of all proprietary for-profit hospitals; and,

• At least 26% of private equity-owned hospitals serve rural populations.”

For PE, hospitals are just potential profit centers.

The money to purchase hospitals comes from large private investors (hence, private equity) through “leveraged buyouts or they use the companies own assets to finance debt” (Brown & Hall, 2024, p. 1). The goals of PE are to get in, buy a hospital or hospital system, and make huge profits over a short period of time. After they wring every penny out of the place, they dump the corpse of the organization (and the unpaid bills), and leave in what one writer calls an “Irish good-bye.”

Private equity firms make huge profits via cost-cutting actions that include firing employees, lowering nurse to staff ratios, using cheaper, less qualified staff, freezing wages, reducing benefits, discontinuing services, postponing maintenance, delaying payments to vendors, and using cheaper and fewer products, among other tactics (Bugbee, 2024; Office of Senator Edward Markey, 2024).

In Massachusetts, Steward Health Care took Catherine Aird’s words to heart: “If you can't be a good example, then you'll just have to be a horrible warning.” The PE firm loaded the hospital with debt, then cut staffing to the point where nurses had difficulty providing care, including giving medications or food to patients (McCluskey, 2024). Wait times were significantly longer in the emergency department (ED), patients often left the ED without being seen, and death rates increased compared to other hospitals for the same condition (Office of Senator Edward Markey, 2024).

In Florida, Rockledge Regional Medical Center, part of Steward Health Care, reeked of sewage from backed up pipes and bat guano due to an infestation of over 5,000 bats in the ICU and elsewhere. Exterminators were called in; they removed the bats—and then the corporation did not pay them (Evans & Weil, 2024; Tkacik, 2024).

In Iowa, Ottumwa Regional Health Center (ORHC) has been operated by PE since 2010. The igniting event for a congressional investigation into PE was a nurse practitioner’s death from an overdose—and evidence on his cellphone of him “sexually assaulting multiple incapacitated female patients over a nearly two-year period” (Senate Budget Committee Bipartisan Staff Report, 2025, p. 87).

Not only are the structures and processes of care inferior in PE-owned hospitals, outcomes of care are worse than in non-PE-owned hospitals.

• Kannan and others (2023) examined all the Medicare Part A (hospitalization) claims data for over half a million patients for 51 PE-owned hospitals in the U.S. and compared them to matched, non-private-equity owned hospitals. The researchers found “private equity acquisition of hospitals, on average, was associated with increased hospital-acquired adverse events (falls, central line infections, and surgical site infections) despite a likely lower-risk pool of admitted Medicare beneficiaries, suggesting poorer quality of inpatient care” (Kannan et al., 2023, p. 2365). In other words, the private-equity owned hospitals admitted younger, healthier patients—and they still had worse outcomes of care than non–private-equity owned hospitals (Buchbinder, Shanks, & Rogers, 2026).

Congressional investigations and peer reviewed articles are important, but not enough to move health care away from this dangerous descent into PE-owned hospitals, nursing homes, and physician practices.

What can you do?

Here are some actions steps you can take.

• Find out which hospitals in your area are PE-owned. PESP tracks and posts these organizations in a searchable database on their website .

• If you are in an area where you have a choice between PE-owned hospital and a non-PE-owned hospital, run, do not walk to the non-PE-owned hospital.

• Pension funds are among PE’s largest sources of money. Ask your employer where your pension fund is invested and who is managing it. Your money should not be used to destroy health care.

• If you work in a hospital, pay attention to your Mission, Vision, and Value statements. Have they moved away from the original mission? Has that part of the website disappeared?

• Support health care unions and unionization efforts. If you are in a union, ask your union what they are doing about PE-owned hospitals.

• At the state level, where much of health care regulation occurs, you can ask your state legislators what they are doing to protect their constituents from PE. Rhode Island’s Hospital Conversion Act can serve as a model.

• At the federal level, you can write to your senator(s) and ask them what they’re doing to follow up on the bipartisan report, Profits over patients: The harmful effects of private equity on the US health care system. Per this report, they should be demanding greater oversight, financial transparency, and reforms “to ensure that PE-driven financial strategies in health care do not come at the expense of patient well-being or sustainability of critical hospital services” (Senate Budget Committee Bipartisan Staff Report, 2025, p. 161-162).

The mantra in healthcare management is we must balance cost, access, and quality of care. PE firms are here for the sickness and to acquire wealth; that mantra is meaningless to them. Quality of care is a nuisance, because it impacts their profits. Access is not their problem—it’s the patient’s problem. Cost is their sole focus, i.e., cutting costs and making more money.

Like pirates of old, PE sails into a city, plunders hospitals, pillages patients and health care workers, and sails away. It’s time for us to take the wind out of their sails.

References for this post along with other resources

Brown, E.C.F. & Hall, M.A. (2024). Private equity and the corporatization of heath care. Stanford Law Review, 76 (3): 527-596.

Buchbinder, S.B., Shanks, N.H. & Kite, B. (2019) Introduction to Health Care Management, 4th Ed. Jones & Bartlett. https://www.amazon.com/dp/1284156567

Buchbinder, S.B., Shanks, N. H., Buchbinder, D., & Kite, B. (Eds). (2022) Cases in health care management 2nd Ed. Jones & Bartlett. https://www.amazon.com/dp/1284180395

Buchbinder, S.B., Shanks, N.H., Rogers, R.K. (2026: Releasing February 12, 2025). Introduction to healthcare management, 5th edition. https://www.amazon.com/Introduction-Health-Management-Sharon-Buchbinder-dp-1284276104/dp/1284276104

Bugbee, M. (2024,) How private equity has looted our hospitals. AFT Health Care, 5(2), 18-23. https://www.aft.org/sites/default/files/media/documents/2024/HC_fall_2024_final.pdf

Collins, Sara R., Bradford H. Gray, and Jack Hadley (2001). The for-profit conversion of nonprofit hospitals in the U.S. health care system: Eight case studies (Report No. 455). New York: Commonwealth Fund.

Evans, M. & Weil, J. (2024, March 20) A bat infestation, postponed surgeries and unpaid bills: A hospital chain in crisis. The Wall Street Journal. https://www.wsj.com/health/healthcare/hospital-chain-financial-crisis-steward-mpt-45be8bfb

Institute of Medicine (US) Committee on Implications of For-Profit Enterprise in Health Care; Gray BH, editor. (1986). For-profit enterprise in health care. National Academies Press (US); 1, Profits and Health Care: An Introduction to the Issues. Available from: https://www.ncbi.nlm.nih.gov/books/NBK217897/

Jeurissen, P. P. T., Kruse, F. M., Busse, R., Himmelstein, D. U., Mossialos, E., & Woolhandler, S. (2021). For-profit hospitals have thrived because of generous public reimbursement schemes, not greater efficiency: A multi-country case study. International journal of health services : planning, administration, evaluation, 51(1), 67–89. https://doi.org/10.1177/0020731420966976

Johnson, E. A. (n.d.) "Thar's gold in them thar hills" Georgia gold history. Digital Library of Georgia. http://dlg.galileo.usg.edu/dahlonega/history.php

Kannan, S., Bruch, J. D., & Song, Z. (2023). Changes in hospital adverse events and patient outcomes associated with private equity acquisition. JAMA, 330(24), 2365–2375. https://doi.org/10.1001/jama.2023.23147

McCluskey, P. D. (2024, September 19). Steward Health Care CEO found in contempt for refusing to testify to Senate committee. https://www.npr.org/2024/09/19/nx-s1-5114113/steward-health-care-ceo-found-in-contempt-for-refusing-to-testify-to-senate-committee

NYC Health + Hospitals. (n.d.) Bellevue historical milestones. https://hhinternet.blob.core.windows.net/uploads/2024/08/bellevue-historical-milestones.pdf

O’Sullivan, G.A., Yonkler, J.A., Morgan, W., and Merritt, A.P. (2003). A field guide to designing a health communication strategy. Johns Hopkins Bloomberg School of Public Health/Center for Communication Programs.

Otto, T. (2013). St. Elizabeths: A history. U.S. General Services Administration. http://www.stelizabethsdevelopment.com/docs/Full_History_of_St_Elizabeths.pdf

Penn Medicine. (2017). History of Pennsylvania Hospital. https://www.uphs.upenn.edu/paharc/timeline/1751/

Poczai, P., & Karvalics, L. Z. (2022). The little-known history of cleanliness and the forgotten pioneers of handwashing. Frontiers in Public Health, 10, 979464. https://doi.org/10.3389/fpubh.2022.979464

Private Equity Stakeholder Project (PESP). (2025). Private equity hospital tracker: A current list of all private equity-owned hospitals in the U.S. https://pestakeholder.org/private-equity-hospital-tracker/#hospital_tracker

Private Equity Stakeholder Project (PESP). (2025). Key findings. https://pestakeholder.org/private-equity-hospital-tracker/#key_findings

Rao, B.R. (2023). Social media marketing impact on health care. International Journal of Science, Engineering and Management (IJSEM). 10(3S). https://ijsem.org/downloads/vol10-si-3s.pdf

Ratcliffe, S. (2018). Oxford essential quotations, 6th ed. https://www.oxfordreference.com/display/10.1093/acref/9780191866692.001.0001/q-oro-ed6-00021040

State of Rhode Island, Department of Health. (2025). Hospitals conversions/mergers program. https://health.ri.gov/programs/hospitalconversionsmerger/

The Office of Senator Edward Markey, Chair of the Subcommittee on Primary Health and Retirement Security, Senate Committee on Health, Education, Labor, and Pensions. (2024, September). The Steward Health Care report: How corporate greed hurt patients, health workers, & communities. https://www.markey.senate.gov/imo/media/doc/the_steward_health_care_report.pdf

Tkacik, M. (2024, February 27). Rockledge Regional Medical Center: Scenes from the bat cave: How Steward Health left a Space Coast community hospital in a literal world of shit. The American Prospect. https://prospect.org/health/2024-02-27-scenes-from-bat-cave-steward-health-florida/

Vedel I, Ramaprasad J, Lapointe L (2020). Social media strategies for health promotion by nonprofit organizations: Multiple case study design. J Med Internet Res, 22(4):e15586 doi: 10.2196/15586

Welch, W. P., Xu, L., De Lew, N., Sommers, B.D. (2023, August). Ownership of hospitals: An analysis of newly-released federal data & a method for assessing common owners. ASPE Office of Health Policy, Data Point, HP-2025-14. https://aspe.hhs.gov/sites/default/files/documents/a559f5e766467511608b827d4ca58cff/hospital-ownership-data-brief.pdf

Wikipedia. (2025). List of the oldest hospitals in the United States. https://en.wikipedia.org/wiki/List_of_the_oldest_hospitals_in_the_United_States

Wilson, D. M., Fabris, L. G., Martins, A. L. B., Dou, Q., Errasti-Ibarrondo, B., & Bykowski, K. A. (2022). Location of death in developed countries: Are hospitals a primary place of death and dying now? OMEGA - Journal of Death and Dying, 0(0). https://doi.org/10.1177/00302228221142430

United States, Congress, Senate, Budget Committee. (2025, January). Profits over patients: The harmful effects of private equity on the US health care system. Senate budget committee bipartisan staff report. 118th Congress. https://www.budget.senate.gov/imo/media/doc/profits_over_patients_the_harmful_effects_of_private_equity_on_the_ushealthcaresystem1.pdf