The number of hospitals owned by private equity (PE) firms has increased in recent years. A key question is how much increasing PE ownership impacts the quality of care.
To answer the question, a Jio 2025 health services research The paper used Medicaid claims data – specifically data from the Transformed Medicaid Statistical Information System (T-MSIS) and Medicaid Analytic eXtract (MAX) – to examine the impact of PE ownership on the quality of care for patients in labor and delivery (L&D) units. The author also examined how payer L&D market share changes following a PE acquisition. Analytically, they use a difference-in-differences approach to match hospitals purchased by PEs to matched non-PE control hospitals.
Using this approach, Xiao found that quality of care did not change, but that PE hospitals dropped out of markets with higher Medicaid market share.
PE acquisitions were associated with a significant 12% decline in Medicaid L&D market share (P<0.05). The decline was more pronounced in states with larger Medicaid-to-Commercial payment gaps (-15.8% vs. -7.2%). However, no significant changes were observed in low-risk cesarean rates, number of procedures, length of stay, or serious maternal morbidity.
The solution proposed by the authors is to “adjust Medicaid payment rates” to better incentivize labor and delivery care for these patients. In short, incentives matter.
Further reading
- Bhatla, A., Bartlett, VL, Liu, M., Zheng, Z., and Vadhera, RK (2025). Changes in the patient care experience following private equity acquisitions of US hospitals. Jama, 333(6), 490. https://doi.org/10.1001/jama.2024.23450
- Cai, C., and Song, Z. (2023). A policy framework for increasing the influence of private equity in health care delivery. Jama, 329(18), 1545. https://doi.org/10.1001/jama.2023.2801
- Richards, MR, and Whaley, CM (2024). Hospital behavior over the private equity life cycle. Journal of Health Economics, 97102902. https://doi.org/10.1016/j.jhealeco.2024.102902
- Soltoff, A., Williams, D., and Braun, RT (2025). Private equity-owned hospices report the highest profits, lowest patient care expenses compared to other ownership models. health matters, 44(10). https://doi.org/10.1377/hlthaff.2025.00327
