Financial Impacts And Operational Implications Of Private Equity Acquisition Of US Hospitals

Abstract

Although private equity acquisition of short-term acute care hospitals purportedly improves efficiency and cost-effectiveness, financial performance after acquisition remains unexamined. We compared changes in the financial performance of 176 hospitals acquired during 2005–14 versus changes in matched control hospitals. Acquisition was associated with a $432 decrease in cost per adjusted discharge and a 1.78-percentage-point increase in operating margin. The majority of acquisitions—134 members of the Hospital Corporation of America, acquired in 2006—were associated with a $559 decrease in cost per adjusted discharge but no change in operating margin. Conversely, non-HCA...

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