Harvard study exposes deadly toll of private equity hospitals
By Benjamin Mateus
September 29, 2025
Introduction
Research led by Dr. Zirui Song of Harvard Medical School published in the Annals of Internal Medicine, September 2025, has delivered one of the clearest warnings yet about the dangers of private equity in American hospitals. The study demonstrates in no uncertain terms that when hospitals fall under the control of private equity firms, the pursuit of profit takes precedence over patient care, leading to deadly consequences in the most critical areas of medicine—the emergency departments and intensive care units of US hospitals.
Private equity’s incursion into healthcare follows a well-worn, perfidious and predatory playbook employed by financial wizards. Firms will usually opportunistically acquire providers through debt-laden leveraged buyouts promising easy cash flow. But in these schemes, hospitals rather than investors are left with the burden of repayment on massive loans.
Then, within a short investment horizon typically of three to seven years, the owners strip out cash through staffing cuts, sale-leasebacks of hospital real estate, and dividend recapitalizations that funnel borrowed money directly into investor pockets. The result is a healthcare system financially hollowed out and left vulnerable to collapse.
The bankruptcy of Steward Health Care in May 2024, which filed for Chapter 11 with more than $9 billion in liabilities after its private equity sponsor, Cerberus Capital Management, reportedly extracted $800 million in profit, stands as a chilling example of this model in practice. The former CEO of Steward, Ralph de la Torre, received $250 million over four years before the company’s collapse.
Private equity’s move into healthcare is not accidental but is rooted in the sector’s unique financial appeal. Healthcare represents $4.5 to $5 trillion in annual spending in the United States, or nearly 18 percent of GDP, and is characterized by relatively stable demand, since people require care regardless of the economic cycle.
For Wall Street, this stability and sheer size have made healthcare one of the most attractive frontiers for financial extraction. The term financialization describes the transformation of systems built for providing important social services to those driven by financial motives, where markets dominate decision-making. More and more, hospitals are being transformed into vehicles for generating returns rather than serving communities.
The consequences are stark. Studies consistently show that private equity ownership raises costs for patients and payers, undermines quality, and contributes to bankruptcies. In 2023 alone, more than one-fifth of all healthcare bankruptcies were at PE-owned companies, including seven of the eight largest failures. Communities lose hospitals, workers lose jobs, and patients lose access to care while investors emerge enriched.
Higher mortality in emergency departments and intensive care units
In this regard, it bears reviewing the findings of Dr. Song and colleagues at Harvard Medical School in collaboration with the University of Chicago and the University of Pittsburgh. Their research examined mortality rates in emergency departments (ED) and intensive care units (ICU) of hospitals held by private equity compared to matched hospitals that serve as controls for their analysis. These two settings were used because survival is acutely dependent on staffing and resources in these critical areas of the hospital. What the researchers asked was, “Does private equity’s model of cost-cutting and financial engineering increase patient deaths?”
The investigators conducted an exhaustive nationwide matched difference-in-differences analysis, using 100 percent Medicare claims and hospital cost reports between 2009 and 2019. They compared 49 private equity–acquired hospitals with 293 control hospitals, covering more than one million ED visits and over 121,000 ICU admissions in the private equity group, alongside more than six million ED visits and 760,000 ICU admissions in the control group. The design allowed them to isolate changes that occurred after acquisition, filtering out both pre-existing hospital differences and broader time trends.
The findings were sobering indeed. After acquisition, Medicare patients arriving in the emergency department faced a 13 percent relative increase in mortality, or seven additional deaths per 10,000 visits, compared to similar non-private equity hospitals. These outcomes coincided with deep cuts to frontline staffing and pay.
ED salary expenditures fell by more than 18 percent, ICU salaries by nearly 16 percent, while overall full-time employment dropped by 12 percent and total hospital salaries by almost 17 percent. Patients were also more likely to be transferred to other acute-care facilities, often the sickest among them, underscoring how reductions in capacity directly translated into patient risk. Even the average ICU stay shortened, suggesting pressure to move patients out more quickly, an efficiency for administrators but a hazard for the critically ill.
This study capped a series of investigations by Dr. Song’s team tracing the trajectory from financial strategy to patient harm. A 2020 JAMA Internal Medicine study had shown that private equity-owned hospitals boosted net income by 27 percent, largely by raising charges and shifting their patient mix toward more profitable, commercially insured patients.
That study revealed the motive but stopped short of documenting harm. In 2023, a related JAMA study led by Song’s colleague Dr. Sneha Kannan found that private equity ownership was associated with a 25 percent increase in hospital-acquired conditions such as infections and falls, hinting at a decline in care quality but leaving the mechanism unclear. Another analysis that year found a paradoxical decline in in-hospital mortality at private equity hospitals, an effect the researchers attributed to selection bias (a statistical sleight of hand), as healthier patients were admitted while sicker ones were transferred elsewhere.
The recent 2025 ED/ICU study provided the missing link. By focusing on the emergency department, where hospitals have no control over who walks through the door, the researchers stripped away the masking effect of patient selection. What they found confirmed their suspicions. When high-acuity patients arrive at hospitals stripped of staff and resources, mortality rises. In this sense, the study stands as a definitive indictment of the private equity model in healthcare, demonstrating that financial engineering does not just destabilize institutions, it kills.
The financialization of US healthcare
The rise of private equity in healthcare is not accidental, but the product of a decades-long political and economic shift that has transformed companies (and health systems) and clinics into targets for financial extraction. Its roots lie in the deregulatory policies enacted in the 1980s, which saw the popularization of borrowing capital to acquire hospitals, with the necessary changes in the tax codes to reward debt-driven takeovers.
This was the birth of the “shareholder value” model, which allowed corporations to prioritize short-term profits over long-term stability. For years, healthcare appeared insulated by its nonprofit character and public mission. But once Medicare and Medicaid reimbursements were opened to for-profit providers and antitrust enforcement was made toothless, the sector became fair game. By the 1990s, for-profit chains had already absorbed parts of the buyout model, paving the way for private equity firms to expand their reach.
The financial crisis of 2007–2008 became the accelerant for such operations. With interest rates slashed and cheap debt flooding the system, private equity firms gained easy access to the lifeblood of their model, leverage. At the same time, investors searching for higher yields turned toward “recession-proof” industries like healthcare, with its steady demand and government-backed revenue streams. Hospitals and nursing homes already reeling from the downturn became easy prey. They were sold off at discount prices and restructured for maximum profitability at the expense of patients and healthcare workers.
The consequences have been …
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