Private equity involvement in healthcare is becoming increasingly common (see sidebar #1). On the plus side, private equity can provide capital and strategic guidance to healthcare entities, fostering innovation and growth. It can also improve operational and technological efficiencies. For instance, a small hospital might gain greater purchasing leverage by being part of a larger group of hospitals owned by a private equity firm.
On the downside, concerns about the bottom line and investor dividends can negatively impact patient care. In some cases, unprofitable service lines, hospitals, clinics, and nursing homes may close, resulting in reduced or no access to care for people in the community.
Nurses need to understand the implications of private equity investment, since they may be practicing in a facility owned by a private equity firm or work in one in the future. Nurses also need to know what to do when a closure occurs so they can facilitate continuity of care and protect themselves from litigation related to inadequate transfer of care.
What is private equity?
Private equity refers to not publicly traded, investor-based ownership of healthcare service providers. Private equity investments include hospitals, nursing homes, hospice agencies, outpatient clinics, physician practices, urgent care facilities, and ambulatory surgery centers.
Funds for the private equity firm’s purchase of a healthcare entity typically come from borrowed money (debt), which accounts for about 60% to 80% of the total, according to a 2024 report by Cai and Song. The remaining funds primarily come from institutional investors, such as pension funds, sovereign wealth funds, and endowments, as well as high-net-worth individuals. The private equity firm often uses the acquired entity’s land and buildings as collateral. The acquired entity assumes the debt, so it needs to increase revenue, decrease costs, or both to pay the debt.
The private equity firm generates revenue for itself by charging management fees to its investors (usually about 2% of the assets being managed, according to Cai and Song), receiving a portion of any profits from the acquired entity, and focusing on items such as high-revenue procedures and cost-cutting measures. It may also charge the acquired entity a management fee for strategic guidance.
Cai and Song summarize the key features of private equity, including a focus on short-term returns, the use of debt to finance purchases, accelerated consolidation, and tax and regulatory advantages. Private equity firms often sell acquired companies within 3 to 7 years.
Unfortunately, there is little regulation of private equity investment (Cai and Song note that about 90% of private equity transactions are exempt from federal review), while there are tax benefits for acquisitions. In addition, transaction transparency is often lacking.
How does private equity affect care?
Private equity has a significant impact on healthcare in several key areas.
Clinicians. Private equity acquisition can affect clinicians’ employment status and earnings. For instance, private equity firms may use workforce cuts to reduce costs. A study by Kannan and Song found that after a private equity acquisition, hospitals experienced reduced salary expenditures, whereas control hospitals saw increased salary expenditures.
Patients. Bhatla and colleagues found that patients’ satisfaction with their hospital experience declined after a private equity acquisition. In addition, patients’ access to care may be reduced when local facilities or service lines close.
Private equity ownership can have a negative impact on quality. For example, a study by Kannan and colleagues found that private equity acquisition of hospitals was associated with higher fall rates and higher surgical site and central line–associated bloodstream infection rates (even though there were fewer surgeries and fewer central lines placed).
Cai and Song note that research on the effects of private equity ownership on mortality has been limited and yielded mixed results. Several studies have found no change in 30-day hospital mortality rates. In the Kannan study, there was a small decrease in in-hospital mortality; however, this might be explained by shifts in patient mix toward younger and fewer dually eligible beneficiaries (i.e., those eligible for both Medicare and Medicaid) being admitted, as well as increased transfers to other hospitals. However, a study by Gupta and colleagues found that private equity acquisition of nursing homes led to a 11% higher short-term mortality (defined as mortality during a nursing home stay and the following 90 days after discharge).
Financial. Private equity acquisition is associated with higher costs for insurers and patients. It has also been associated with a lower percentage of Medicare patient discharges, implying an increase in privately insured patients with higher reimbursement rates. Cai and Song note that private equity-owned hospitals are associated with lower operating costs per discharge (probably because of reduced staffing).
Offodile and colleagues found that private equity acquired hospitals have higher charge-to-cost ratios and higher operating margins, and another study (by Schrier and colleagues)found that hospital assets decreased after private equity acquisition; the study used two years of post-acquisition data. Finally, Cai and Song noted that nursing homes tend to acquire more debt after a private equity acquisition.
A systematic review by Karamardian and colleagues helpfully summarizes some of the effects of private equity on healthcare. The authors report that private equity ownership can negatively affect healthcare quality and outcomes while increasing costs. However, the same review noted that there can be positive effects. The key may be in how private equity firms operate.
What should nurses do when a private equity firm acquires a facility?
Nurses should consider the following if a private equity firm acquires their facility.
- Commit to ensuring continued patient safety. This includes participating in quality improvement endeavors.
- Research the firm to learn about its previous experience in the healthcare arena and the effects on facilities after the firm has purchased them.
- Speak up if changes are affecting patient care.
- Collaborate with the leadership team to identify operational efficiencies that do not compromise patient care.
- Even if not working in a private equity-owned facility or practice, nurses can advocate for greater regulation of acquisitions.
Raising awareness
Private equity can benefit an organization, but it can also lead to problems such as increased costs for patients, staffing reductions, and a reduction in the quality of care. As part of their commitment to quality patient care, nurses should be aware of potential issues, including closures of hospitals and nursing homes (see sidebar #2).
Cynthia Saver, MS, RN, is a medical writer in Columbia, Md.
Sidebar #1
Private equity and hospital stats
- Private equity firms own about 8.5% of all private hospitals in the United States.
- Private equity firms own about 22.6% of for-profit hospitals.
- At least 27.7% of private equity-owned hospitals serve rural populations.
- Nearly one-fourth (22.6%) of private equity-owned facilities are psychiatric hospitals.
- New Mexico has the highest proportion of private equity-owned hospitals (36.2%).
Sources: Private Equity Stakeholder Project. PESP private equity hospital tracker. 2025. https://pestakeholder.org/private-equity-hospital-tracker/#hospital_tracker
Sidebar #2
What to do when a facility closes?
Sometimes the private equity acquisition doesn’t work out, and a hospital or clinic closes. Nurses and nurse partitioners can take the following steps to help patients with the transition.
Understand responsibilities. Determine who is responsible (e.g., the organization, the clinician) for different aspects of the closure, such as notifying patients and transferring medical records. Employers will need to check for any state requirements, such as specific timelines for notifying patients. Employers will also need to notify regulatory agencies such as the Centers for Medicare & Medicaid Services, state licensing agencies, and accrediting bodies.
Communicate clearly. Reassure patients that you will facilitate the transfer of care. Provide information, such as the timing of the closure, both verbally and in writing, in the patient’s preferred language. It is a good idea to use multiple avenues of communication, including email, telephone, text, and in-person meetings. Keep patients and families informed and answer questions honestly.
Plan for continuity of care. Transition of care is vital not only to help patients, but also to protect nurses from charges of patient abandonment. Some patients may be eligible for discharge, but most will need to transition to other facilities and providers. Collaborate with others to determine which patients require transfer. Provide resources, such as community social services and lists of potential providers, to individuals who are not transitioning to another hospital or clinic. Nurse practitioners will want to provide adequate medication refills for patients who do not yet have a new provider.
Collaborate with receiving facilities and providers. Provide detailed information about patients’ medical history and care needs when working with receiving facilities and providers. Help patients with making follow up appointments as needed. Be sure that medical records are transferred securely. It’s a good idea for patients to have a copy of their medical records if they are not going directly to another hospital or nursing home.
Document. Be sure to document all information provided to facilities and providers, as well as the information given to patients regarding the closure and transition of care. Information for receiving providers should include diagnosis, medications, treatments, test results, and care plan.
Protect yourself. Update your liability insurance provider; you’ll want to ensure you have “tail coverage” (coverage for claims that occur after your insurance coverage ends) and that your coverage continues without gaps. Also check to see if there will be a severance agreement from the employer. Brent notes that these agreements often include a lump sum of money (or periodic payments of a specific duration), the release of any legal claims from both parties, any continuation of benefits, and guidelines for handling job references. Do not sign anything that infringes on your right to speak.
Be professional. Closing a facility can be emotional, particularly if you’ve worked there for several years or do not have another job lined up. It’s important to act professionally with patients, colleagues, and leaders, and engage in self-care.
References
Bhatla A, Bartlett VL, Liu M. Changes in patient care experience after private equity acquisition of US hospitals. JAMA. 2025;333(6):490-497.
Brent N. Understanding severance agreements: what every nurse should know. Nurse.com. 2025. https://www.nurse.com/blog/understanding-severance-agreements/
Cai C, Song Z. Private equity in health care: prevalence, impact, and policy options for California and the US. California Health Care Foundation. 2024.
Gupta A, Howell ST, Yannelis C, Gupta A. Owner incentives and performance in healthcare: private equity investment in nursing homes. Rev Financial Studies. 2024;37(4):1029-1077.
Kannan S, Bruch JD, Song Z. Changes in hospital adverse events and patient outcomes associated with private equity acquisition. JAMA. 2023;330(24):2365-2375.
Kannan S, Song Z. Variation in hospital salary expenditures and utilization changes after private equity acquisition, 2005-2019. Health Aff. 2025;44(2):206-214.
Karamardian M, Jagtiani E, Chawla A, Nembhard IM. An update on impacts of private equity ownership in health care: extending a systematic review. Health Management, Policy and Innovation. 2024;9(2)
Miller J. What happens when private equity takes over a hospital. Harvard Medical School. 2023. https://hms.harvard.edu/news/what-happens-when-private-equity-takes-over-hospital
Offodile AC, Cerullo M, Binadal M, Rauh-Hain JA, Ho V. Private equity investments in health care: an overview of hospital and health system leveraged buyouts, 2003-17. Health Aff. 2021;40(5):719-726.
Private Equity Stakeholder Project. PESP private equity hospital tracker. 2025. https://pestakeholder.org/private-equity-hospital-tracker/#hospital_tracker
Schrier E, Schwartz HEM, Himmelstein DU. Hospital assets before and after private equity acquisition. JAMA. 2024;332(8):669-671.