Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes
59 Pages Posted:
Date Written: February 13, 2020
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.
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