The number of hospitals owned by private equity (PE) firms has increased in recent years. One key question is how increased PE ownership has impact quality of care.
To answer the question, a Jiao 2025 Health Services Research paper used claims 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 quality of care for patients in labor & delivery (L&D) units. The author also examined how payer L&D market share changes after PE acquisition. Analytically, they use a difference-in-difference approach to match hospitals purchased by PE against matched non-PE control hospitals.
Using this approach, Jiao finds that quality of care did not change, but PE hospitals exited markets with high Medicaid market share.
PE acquisition was associated with a significant 12% decrease in Medicaid L&D market share (p < 0.05). The reduction 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 severe maternal morbidity.
The solution the author proposes is to “adjusting Medicaid payment rates” in order to better incentivize labor and delivery care for these patients. In short, incentives matter.
Further reading
Bhatla, A., Bartlett, V. L., Liu, M., Zheng, Z., & Wadhera, R. K. (2025). Changes in Patient Care Experience After Private Equity Acquisition of US Hospitals. JAMA, 333(6), 490. https://doi.org/10.1001/jama.2024.23450Cai, C., & Song, Z. (2023). A Policy Framework for the Growing Influence of Private Equity in Health Care Delivery. JAMA, 329(18), 1545. https://doi.org/10.1001/jama.2023.2801Richards, M. R., & Whaley, C. M. (2024). Hospital behavior over the private equity life cycle. Journal of Health Economics, 97, 102902. https://doi.org/10.1016/j.jhealeco.2024.102902Soltoff, A., Williams, D., & Braun, R. T. (2025). Private Equity–Owned Hospices Report Highest Profits, Lowest Patient Care Spending Compared With Other Ownership Models. Health Affairs, 44(10). https://doi.org/10.1377/hlthaff.2025.00327
