Harvard Study Finds Private Equity Hospital Takeovers Increase Emergency Room Deaths by 10%

In December 2021, researchers at Harvard Medical School published a landmark study in Annals of Internal Medicine demonstrating that hospitals acquired by private equity firms experienced significant increases in emergency department mortality—7 additional deaths per 10,000 visits (approximately 10% increase)—linked directly to private equity-driven staffing cuts and reduced salary expenditures. The study provided quantitative evidence that private equity’s profit-maximization strategies kill patients by subordinating medical care to financial extraction.

Study Methodology and Findings

Harvard researchers analyzed Medicare claims data comparing outcomes at hospitals acquired by private equity firms to similar hospitals that remained under traditional ownership:

Sample:

• 51 hospitals acquired by private equity firms (2009-2019)
• Compared to matched control hospitals with similar patient demographics
• Focus on emergency departments and intensive care units
• Medicare-based analysis of patient outcomes

Key Mortality Finding:

• 7 additional deaths per 10,000 ED visits after private equity acquisition
• Approximately 10% increase in mortality rate compared to non-PE hospitals
• Deaths concentrated in patients with conditions requiring intensive nursing care
• No corresponding improvements in any measured patient outcomes

Mechanism: Staffing and Salary Cuts:

The study identified specific cost-cutting measures driving increased mortality:

Emergency Department Impacts:

• 18.2% reduction in ED salary expenditures compared to non-PE hospitals
• Reduced physician staffing levels
• Increased use of physician assistants and nurse practitioners to replace doctors
• Longer wait times and reduced time per patient

Intensive Care Unit Impacts:

• 16% reduction in ICU salary expenditures
• Reduced nurse-to-patient ratios
• Less experienced staff replacing senior physicians and nurses
• Reduced monitoring and interventions

Hospital-Wide Effects:

• 11.6% reduction in full-time employees on average
• 16.6% reduction in total salary expenditures
• Systematic replacement of higher-paid experienced staff with lower-paid, less-experienced workers

Private Equity’s Healthcare Penetration

By 2021, private equity had achieved massive market penetration in U.S. healthcare:

Emergency Department Control:

• 25% of all U.S. emergency departments staffed by PE-backed contract management groups
• Nearly one-third of emergency departments operated by PE-backed physician staffing companies
• Two companies—TeamHealth (Blackstone) and Envision Healthcare (KKR)—controlled at least one-third of hospital emergency departments

Market Dominance:

• TeamHealth: 20,000 employees, owned by Blackstone Group
• Envision Healthcare: 69,300 employees, owned by KKR
• Combined revenue exceeding $20 billion annually from physician staffing

Expansion Strategy:

• Target essential hospital services (emergency, anesthesiology, radiology)
• Acquire physician staffing companies rather than just hospitals
• Control chokepoints in hospital operations to maximize extraction

The Private Equity Playbook: Killing for Profit

The Harvard study documented how private equity firms systematically extract value while degrading patient care:

1. Leverage: Load with Debt

Private equity acquisitions involve minimal equity investment, instead loading acquired hospitals and physician groups with massive debt:

• Acquire hospital or medical practice for $100 million
• Contribute $20-30 million in equity, borrow $70-80 million
• Debt burden falls on the acquired entity, not the PE firm
• Interest payments drain resources that would otherwise fund staffing and equipment

2. Management Fees and Dividends

PE firms extract wealth through fees regardless of performance:

• Management fees: 2% of assets annually paid to PE firm
• Special dividends: Extract cash by forcing hospitals to borrow and pay PE owners
• Transaction fees: Charge acquired hospitals for the acquisition itself
• Monitoring fees: Charge for “oversight” and “strategic advice”

3. Operational “Efficiencies”: Cut Staff and Wages

The Harvard study quantified what PE firms call “operational improvements”:

Staffing Cuts:

• Reduce physician hours and replace doctors with cheaper practitioners
• Decrease nurse-to-patient ratios below safe levels
• Eliminate “redundant” positions like social workers and patient advocates
• Increase workloads on remaining staff to extract more labor

Wage Suppression:

• Replace experienced, higher-paid staff with inexperienced, lower-wage workers
• Reduce or eliminate pension and retirement benefits
• Cut continuing education and professional development funding
• Resist unionization efforts through aggressive anti-union campaigns

Supply and Equipment:

• Defer equipment maintenance and replacement
• Use lower-cost medical supplies even when quality differs
• Reduce pharmaceutical inventories to minimum levels
• Cut “non-essential” services like interpreters and social support

4. Billing Optimization: Maximize Revenue

While cutting costs that affect patient care, PE firms aggressively maximize billing:

• Upcode procedures to bill for more expensive services
• Maximize out-of-network billing for surprise medical bills
• Pursue aggressive collections including suing patients and garnishing wages
• Use emergency departments as profit centers through surprise billing

5. Real Estate Extraction

PE firms often separate valuable hospital real estate into separate entities:

• Sell hospital buildings to related real estate investment trusts (REITs)
• Force hospitals to pay rent to PE-controlled landlords
• Extract real estate value while leaving hospitals with lease obligations
• Real estate deals enrich PE investors while draining hospital operating budgets

The Death Mechanism: How Staffing Cuts Kill

The Harvard study’s mortality findings reflect predictable outcomes of PE cost-cutting:

Delayed Care:

• Fewer physicians mean longer wait times
• Critical conditions progress while patients wait
• “Sentinel events” missed due to inadequate monitoring
• Patients deteriorate before receiving necessary interventions

Inadequate Monitoring:

• Reduced nursing staff cannot adequately monitor ICU patients
• Early warning signs of complications missed
• Less frequent vital sign checks and patient assessments
• Mistakes and oversights increase with overworked staff

Lower Quality Care:

• Less experienced practitioners make more diagnostic errors
• Rushed evaluations miss critical findings
• Inadequate time per patient reduces thoroughness
• Staff exhaustion increases error rates

Missed Complications:

• Reduced staffing means less frequent patient rounds
• Post-procedure complications detected later or not at all
• Inadequate response to emergent changes in patient status
• Deaths from preventable complications increase

Specific Examples: TeamHealth and Envision

The study’s findings reflected documented practices at major PE-backed staffing companies:

TeamHealth (Blackstone)

Staffing Strategy:

• Implemented “optimal” staffing models that reduced physician hours
• Replaced emergency physicians with nurse practitioners and PAs
• Increased patient volume per provider beyond safe levels
• Pressured physicians to see more patients in less time

Billing Practices:

• Pioneered out-of-network surprise billing strategies
• Went out-of-network to negotiate higher rates, threatening surprise bills to patients
• Increased charges by 68% after obtaining higher in-network rates through threats
• Used emergency services as leverage against insurers

Financial Extraction:

• Blackstone acquired TeamHealth for $6.1 billion in 2016
• Loaded company with debt to fund acquisition
• Extracted hundreds of millions in fees and dividends
• Left TeamHealth facing bankruptcy by 2020 while Blackstone profited

Envision Healthcare (KKR)

EmCare Practices:

• When EmCare (Envision’s subsidiary) took over emergency departments, charges nearly doubled
• Systematically went out-of-network to maximize billing
• Raised out-of-network rates by 81 percentage points at acquired hospitals
• Used surprise billing as weapon to extract higher insurance payments

Staffing Cuts:

• American Physician Partners (Envision subsidiary) employed fewer doctors as cost-saving
• Replaced physician coverage with lower-cost practitioners
• Reduced per-patient physician time
• Increased workload expectations beyond sustainable levels

Financial Engineering:

• KKR acquired Envision for $9.9 billion in 2018
• Extracted over $500 million in fees and dividends
• Loaded Envision with $7+ billion in debt
• Company filed bankruptcy in 2023 after PE extraction left it insolvent

Regulatory Capture: No Oversight of PE Healthcare

Private equity’s deadly healthcare practices continued unchecked due to regulatory failures:

No Federal Oversight:

• No federal agency regulates private equity ownership of healthcare facilities
• CMS (Medicare/Medicaid) does not consider ownership structure in hospital evaluations
• FTC rarely challenges healthcare PE acquisitions despite concentration concerns
• SEC treats PE healthcare investments like any other sector despite unique patient safety implications

State Regulation Gaps:

• Most states lack authority to block PE hospital acquisitions
• Certificate of Need laws focus on facility expansion, not ownership changes
• State health departments often unaware of PE ownership and management
• No state systematically tracks patient outcomes by ownership type

Professional Board Limitations:

• Medical boards regulate individual physicians, not corporate owners
• Corporate practice of medicine doctrine poorly enforced
• Boards cannot sanction PE firms for systemic care degradation
• Individual physician licenses threatened if they resist PE protocols

Liability Shields:

• PE firms structure ownership to isolate themselves from malpractice liability
• Claims directed at employed physicians and subsidiary entities, not PE owners
• Corporate structures obscure responsibility and prevent accountability
• Patients cannot sue PE firms for deaths caused by cost-cutting decisions

The Surprise Billing Connection

Private equity’s emergency department control enabled the surprise billing epidemic:

The Strategy:

1. Acquire emergency department staffing contracts
2. Take physician group out of all insurance networks
3. Send massive surprise bills to patients seeking emergency care
4. Use threat of patient bills to extract higher payments from insurers
5. Profit from both higher insurance payments and patient payments

Scale of Problem:

• 1 in 5 emergency visits resulted in surprise bills
• Average surprise bill: $628 for emergency physician services
• Some bills exceeded $50,000 for emergency care
• Patients couldn’t avoid because emergencies require immediate care at nearest hospital

Legislative Response: The No Surprises Act (2021) banned most surprise billing, but:

• Implementation delayed and weakened by PE lobbying
• Arbitration process became another PE profit center
• TeamHealth and Radiology Partners filed 43% of all arbitration claims in 2023-24
• PE firms turned patient protection law into new revenue stream

Financial Outcomes vs. Patient Outcomes

The Harvard study highlighted the fundamental contradiction in PE healthcare ownership:

For Private Equity:

• Blackstone’s TeamHealth investment generated substantial returns despite eventual bankruptcy
• KKR extracted hundreds of millions from Envision before bankruptcy
• PE firms profited enormously even as hospitals and physician groups failed
• Individual partners and executives enriched regardless of patient harm

For Patients:

• 7 additional deaths per 10,000 ED visits
• Longer wait times and reduced access to care
• Lower quality care from less experienced, overworked staff
• Surprise medical bills driving personal bankruptcy

For Healthcare Workers:

• Wage suppression and benefit cuts
• Increased workloads and deteriorating working conditions
• Moral injury from inability to provide adequate care
• Blame for systemic failures caused by PE cost-cutting

For Communities:

• Hospital closures after PE asset-stripping
• Reduced access to emergency and specialty care
• Healthcare costs shifted to public insurance and taxpayers
• Economic devastation when major employers close

Academic and Policy Response

The Harvard study catalyzed increased scrutiny of PE healthcare ownership:

Senate Investigation: Senator Elizabeth Warren and others launched investigations into PE healthcare practices, focusing on Steward Health Care’s collapse and PE emergency department staffing.

Proposed Legislation: Multiple bills proposed to:

• Require disclosure of PE ownership of healthcare facilities
• Grant CMS authority to deny Medicare participation by PE-owned facilities
• Impose patient safety standards on PE-backed providers
• Hold PE firms liable for patient harm from cost-cutting

State Action: Some states began requiring:

• Disclosure of ownership changes and PE involvement
• Review of healthcare acquisitions for patient safety impact
• Minimum staffing ratios in hospitals and nursing homes
• Enhanced oversight of PE-owned facilities

However, as of 2024, no major federal legislation had passed, and PE’s healthcare penetration continued expanding.

The Moral Calculus: Acceptable Deaths for Profit

The Harvard study’s findings forced explicit recognition of PE healthcare’s core trade-off:

The Math:

• 7 deaths per 10,000 visits = 0.07% mortality increase
• Across PE-controlled EDs seeing ~50 million annual visits = ~3,500 additional deaths per year
• Staffing cuts saving ~18% of salary costs = hundreds of millions in annual savings
• PE firms keep savings as profits, patients bear mortality costs

The Ethics: PE firms made explicit decisions that:

• Saving money through staffing cuts justified increased patient deaths
• Shareholder returns outweighed patient survival
• Profits extracted today mattered more than long-term patient outcomes
• Individual patient deaths were acceptable costs of “operational efficiency”

Systemic Failure: Profit Incentives vs. Patient Care

The Harvard study documented the inevitable outcome when profit-maximizing investors control essential medical services:

Incompatible Objectives:

• PE firms require 20%+ annual returns on investment
• High returns demand aggressive cost-cutting and revenue maximization
• Quality patient care requires adequate staffing and resources
• Financial and patient care objectives directly conflict

Structural Incentives:

• PE partners compensated based on returns to investors, not patient outcomes
• Hospital administrators’ bonuses tied to cost reduction, not care quality
• Physicians pressured to see more patients faster regardless of safety
• Nurses punished for advocating for patients when it conflicts with cost targets

Information Asymmetry:

• Patients cannot assess quality of emergency care before receiving it
• Emergency situations eliminate patient choice and market discipline
• Quality problems take years to manifest in data
• By the time mortality increases are documented, PE firms have extracted value and exited

Comparison to Other Industries

Private equity uses similar strategies across industries, but healthcare presents unique dangers:

Retail and Manufacturing:

• PE cost-cutting in retail leads to store closures and job losses
• Negative outcomes affect workers and communities economically
• No one dies from inadequate retail staffing

Healthcare:

• PE cost-cutting leads to patient deaths
• Negative outcomes are permanent (death) and irreversible
• Victims cannot choose alternative providers during emergencies
• Harm affects most vulnerable: sick, injured, and critically ill

The Harvard study’s mortality findings demonstrated that applying PE strategies to healthcare doesn’t just reduce service quality—it kills people.

The Continuing Expansion

Despite evidence of increased mortality, PE healthcare investment accelerated:

2021-2023 Trends:

• PE healthcare deals exceeded $100 billion annually
• Focus shifted to physician practices, specialty care, and behavioral health
• Roll-up strategies consolidating entire medical specialties in regions
• Increased use of management services organizations (MSOs) to obscure PE ownership

New Targets:

• Behavioral health and addiction treatment
• Autism therapy services
• Kidney dialysis centers
• Physician practices (dermatology, gastroenterology, ophthalmology, etc.)

Regulatory Evasion: Each new structure attempts to evade scrutiny while replicating the extraction playbook the Harvard study showed kills patients.

The Cost of Regulatory Capture

The Harvard study documented deaths caused by regulatory failure:

• Federal and state regulators knew PE was acquiring healthcare facilities
• No agency systematically tracked patient outcomes by ownership
• No regulator blocked acquisitions based on patient safety concerns
• No PE firm faced sanctions or penalties despite documented mortality increases

This regulatory paralysis reflected PE’s political power:

• Major PE firms are significant political donors
• Industry lobbying prevents healthcare-specific PE regulation
• Revolving door between PE firms and regulatory agencies
• Political system treats healthcare like any other investment sector

Conclusion: Death as Business Model

The Harvard study provided empirical confirmation of what healthcare workers had reported for years: private equity’s profit-maximization strategies kill patients. The 10% increase in emergency department mortality represents approximately 3,500 preventable deaths annually—deaths caused by deliberate decisions to cut staffing and reduce salary expenditures to maximize returns to investors.

These deaths are not accidental byproducts of well-intentioned efficiency efforts. They are the predictable, documented outcome of applying financial engineering to medical care. Private equity firms know that cutting staffing increases mortality—the Harvard study merely quantified what was already obvious to anyone working in PE-acquired hospitals.

The fundamental question is whether American society will continue permitting an industry to profit from killing patients, or whether patient safety will finally outweigh private equity’s political power and regulatory capture. The Harvard study made the choice explicit: either regulate PE healthcare ownership to protect patients, or accept thousands of preventable deaths annually as the price of PE investor profits.

As of 2024, the political system has chosen profits over patients. The deaths continue.