Characteristics of private equity-owned hospitals in 2018

Background: There are approximately 5200 community hospitals in the United States. About 1300 of them are investor-owned, for-profit hospitals whose owners are corporations, groups of physicians, or other private entities. Private equity firms use capital from individuals and institutions to invest in organizations. They are increasingly buying hospitals, which they typically plan to sell for a profit within 3 to 7 years after acquisition (1, 2). A recent study evaluated changes in hospital income, use, and quality associated with private equity acquisitions between 2005 and 2017 (2). Objective: To compare acute care hospitals owned by private equity firms with similarly sized and located hospitals not owned by private equity firms in 2018. Methods and Findings: We used merger and acquisition reports by Irving Levin Associates and public information to identify 130 hospitals under private equity control in 2018. We then identified all 2868 hospitals that had a full year of data in the 2018 Medicare Cost Report, extracted information on size (1 to 49 beds, 50 to 450 beds, and ≤451 beds), and assigned the hospitals to health care markets (hospital referral regions) using The Dartmouth Atlas of Health Care. We used health care markets and size groups to identify 688 hospitals that we could match to a private equity hospital. Within matched groups, there were 1 to 56 matched control hospitals per private equity hospital, with a median of 8 control hospitals and an interquartile range of 10. We assigned each private equity hospital a weight of 1 and assigned its matched hospitals' weights that summed to 1. We used these weights in all analyses.