Private equity firms are increasingly buying up hospitals, report finds

Private equity (PE) is becoming the most popular kid in the healthcare industry.

PE firms own 8% of all US private hospitals as of January 2024, researchers from the nonprofit Private Equity Stakeholder Project (PESP) found.

Some experts, including lawmakers, are concerned about the rising trend of PE firms scooping up hospitals. They argue the business model is incompatible with delivering quality care, as PE firms typically seek high profits over a short time period. PE-owned hospitals also tend to report higher complication rates compared to other facilities.

“We have seen PE firms aggressively loot safety-net hospitals, strip out valuable real estate, cut critical but less profitable services, and exploit government funding programs designed to support and stabilize healthcare access,” PESP researchers wrote in a report.

Just how popular is PE?

The researchers found that PE firms own at least 460 US hospitals. More than a quarter (26%) of the hospitals are located in rural areas, with Texas having the most of all 50 states (97). New Mexico has the highest proportion of PE-owned hospitals (38% of all private hospitals in the state), and 22.5% of PE-owned facilities across the country are psychiatric hospitals.

New York City-based PE firm Apollo Global Management owns the most hospitals of any PE firm, according to the PESP researchers. The firm owns at least 224 hospitals through two health systems, Lifepoint Health and ScionHealth. Other PE firms that own the most hospitals include Equity Group Investments, One Equity Partners, GoldenTree Asset Management, Davidson Kempner, Bain Capital, and Webster Equity Partners.

Concerns over PE-owned hospitals

The US government has raised concerns over PE ownership in healthcare; the Senate Budget Committee opened a bipartisan investigation into PE-owned hospitals in December 2023.

“As private equity has moved into healthcare, we have become increasingly concerned about the associated negative outcomes for patients,” Sheldon Whitehouse, a Democratic senator from Rhode Island and chairman of the budget committee, said in a statement. “From facility closures to compromised care, it’s now a familiar story: Private equity buys out a hospital, saddles it with debt, and then reduces operating costs by cutting services and staff—all while investors pocket millions. Before the dust settles, the private equity firm sells and leaves town, leaving communities to pick up the pieces.”

The PESP researchers added that the consequences of PE ownership “have been borne by healthcare workers and the communities they serve.”