Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes

65 Pages Posted: 9 Mar 2020 Last revised: 16 Nov 2020

See all articles by Atul Gupta

Atul Gupta

University of Pennsylvania - Health Care Management

Sabrina T Howell

New York University (NYU) - Leonard N. Stern School of Business; National Bureau of Economic Research (NBER)

Constantine Yannelis

University of Chicago

Abhinav Gupta

University of North Carolina (UNC) at Chapel Hill - Finance Area

Multiple version iconThere are 3 versions of this paper

Date Written: November 12, 2020

Abstract

The past two decades have seen a dramatic increase in private equity investment in healthcare, a sector in which intensive government subsidy and market frictions could lead high-powered for-profit incentives to be misaligned with the social goals of quality care at a reasonable cost. This paper studies the effects of private equity ownership on patient welfare and spending at nursing homes. With administrative patient-level data, we use a within-facility instrumental variables strategy to address both non-random targeting of facilities and non-random matching of patients into nursing homes. The estimates show that private equity ownership increases short-term mortality by 10%, which implies about 21,000 lives lost due to private equity ownership over our sample period. Private equity ownership also increases spending by 19%, the vast majority of which is billed to taxpayers. We observe several channels that help explain the increase in mortality: declines in patient-level health measures, such as worsening mobility and elevated use of anti-psychotic medications; declines in nurse availability per patient; and declines in compliance with federal and state standards of care.

Suggested Citation

Gupta, Atul and Howell, Sabrina T and Yannelis, Constantine and Gupta, Abhinav, Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes (November 12, 2020). NYU Stern School of Business, Available at SSRN: https://ssrn.com/abstract=3537612 or http://dx.doi.org/10.2139/ssrn.3537612

Atul Gupta

University of Pennsylvania - Health Care Management ( email )

204 Colonial Penn Center
3641 Locust Walk
Philadelphia, 19104-6218
United States

Sabrina T Howell (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States
212-998-0913 (Phone)

HOME PAGE: http://www.sabrina-howell.com

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Constantine Yannelis

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Abhinav Gupta

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,307
Abstract Views
12,638
Rank
8,013
PlumX Metrics