Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes

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Atul Gupta

University of Pennsylvania - Health Care Management

Sabrina Howell

New York University (NYU) - Leonard N. Stern School of Business

Constantine Yannelis

New York University Leonard N. Stern School of Business; University of Chicago Booth School of Business

Abhinav Gupta

New York University (NYU) - Department of Finance

Date Written: February 13, 2020

Abstract

Private Equity (PE) investment in healthcare has increased dramatically in recent years. This paper studies how PE buyouts affect the quality of care in nursing homes. Using comprehensive facility-level data from 2000 to 2017, we find robust evidence of declines in patient health and compliance with care standards. These declines appear to reflect cuts to front-line nursing staff, one component of efficiency improvements that also include higher bed utilization. Neither selection nor patient composition changes can fully explain the results. The particular incentives of PE managers appear responsible, as quality does not decline after acquisitions by non-PE corporates and chains.

Suggested Citation

Gupta, Atul and Howell, Sabrina and Yannelis, Constantine and Gupta, Abhinav, Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes (February 13, 2020). Available at SSRN: https://ssrn.com/abstract=

Atul Gupta

University of Pennsylvania - Health Care Management ( email )

204 Colonial Penn Center
3641 Locust Walk
Philadelphia, 19104-6218
United States

Sabrina Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

Constantine Yannelis

New York University Leonard N. Stern School of Business ( email )

Suite 9-160
New York, NY
United States

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Abhinav Gupta

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

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