Private equity takeovers of health services worldwide are associated with worse quality of care and higher costs, according to the largest study of its kind.
In the past decade, private equity firms have increasingly invested in, acquired and consolidated healthcare facilities. Globally, healthcare buyouts have exceeded £157bn since 2021 alone.
Despite much speculation, evidence about the impact of this rapidly growing global trend has been lacking.
Now a systematic review of private equity healthcare service takeovers across eight countries including the US, UK, Sweden and the Netherlands provides it. Private equity (PE) ownership of healthcare services including hospitals and nursing homes is linked to a harmful effect on cost and quality of care, suggests the review published in the BMJ medical journal.
The authors of the review, which was led by the University of Chicago, said: “The most unequivocal evidence points to PE being associated with an increase in healthcare costs. Evidence across studies also suggests mixed impacts of PE ownership on healthcare quality, with greater evidence that PE ownership might degrade quality in some capacity rather than improve it.”
No consistently beneficial effects of private equity ownership were identified, the researchers said. “The current body of evidence is robust enough to confirm that PE ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting and possibly increased regulation,” they wrote.
The researchers identified 1,778 studies, of which 55 met the inclusion criteria. They looked at the impact of private equity takeovers on costs, quality of care and health outcomes.
Nine of 12 studies revealed higher costs to patients or the funders of healthcare at services owned by such firms, three found no differences, and none showed lower costs.
Private equity ownership was also associated with a mixed to harmful impact on healthcare. Of 27 studies that assessed quality of care, 12 found harmful effects, three found beneficial, nine found mixed – some measures declined, some improved – and three were neutral.
Health outcomes showed beneficial and harmful results, but the volume of studies for this measure was too low for any definitive conclusions to be drawn.
Cat Hobbs, the director of the public ownership campaign group We Own It, said: “This important new study is sadly no surprise. When vital services are privatised, patients get the worst of both worlds: higher costs for worse quality care.
“Private equity firms will always put their duty to make a financial return first – that’s their job. But these incentives are in direct conflict with the public good. Healthcare is not just another investment opportunity. It’s a crucial public service which we all need at some point in our lives.”
She added: “Private equity ownership in the healthcare sector is on the rise fast, and the public need to know the risks it poses to care quality and access.”
David Rowland, the director of the Centre for Health and the Public Interest, a thinktank, said regulators and politicians needed to “get a grip” of how private equity takeovers impact healthcare.
He said: “How one makes the sizeable returns which these private equity funds require from providing care to a child with learning difficulties, for example, is a question which is never asked either by regulators or politicians. But it is clear from this research that squeezing profit from these types of services can put patients and vulnerable people at risk.”
Dr Tony O’Sullivan, the co-chair of the campaign group Keep Our NHS Public, said the review provided a “screamingly obvious piece of evidence”. Policymakers must prioritise public funding and provision of healthcare if they are to avoid “damaging” consequences for patients, he said.
