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For patients hospitalized with a specific condition, like those in a new lung study, Medicare typically pays a lump sum. This means “the sooner you get them out, the greater the delta between what you’re being paid and what it costs you,” said Rishi Wadhera, MD, cardiologist and associate director of Health Policy at the Smith Center for Outcomes Research in Boston. Private equity hospitals may be pushing for faster discharges or truncating the home-transition period in the name of efficiency, which can lead to readmissions.
In the study of nearly 350,000 cases, lung patients treated for chronic obstructive pulmonary disease (COPD) and pneumonia at private equity-owned hospitals experienced meaningfully worse outcomes.
According to the data presented at the recent American Thoracic Society 2026 conference, Medicare patients with pneumonia were more likely to die at private equity-owned hospitals than in other hospitals. Medicare patients with COPD treated at private equity-owned hospitals were more likely to return to the hospital within 30 days of discharge.
Together, COPD and pneumonia are the leading causes of lung-related hospitalizations in the US and two of the most common causes of hospitalization among the Medicare population. The measurable declines in their care pose a costly public health problem and are the latest evidence for growing concern about private equity’s ownership of the healthcare system, particularly hospitals.
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Worsened outcomes could also be the product of drawing budgets too tight. While the study didn’t measure contributing factors, the authors hypothesize that workforce shortages are partly to blame. Private equity notoriously reduces staff, particularly skilled nursing staff, said Aaron Mitchell, MD, oncologist at Memorial Sloan Kettering Cancer Center in New York City, who researches private equity and financial determinants of care.
This situation creates capacity issues for the hospitals and can lead to delayed recognition of patient issues. The same connection was demonstrated in a 2025 emergency department study, where increased death rates coincided with a 20% cut in emergency department salaries.
The Effects of Private Equity
“Private equity has acquired nearly 500 acute care hospitals in the US. So, this isn’t really a niche financial story anymore. It’s a structural transformation in how some Americans receive care,” said Wadhera, lead author of the study. And without guardrails, that transformation stands to have dangerous downstream effects and high costs for patients.
The study, which focused on Medicare patients, examined pulmonary outcomes 3 years prior to private equity acquisition and 3 years after. Each private equity hospital was also matched with up to five control hospitals, assigned based on factors like for-profit ownership, teaching status, safety-net status, region, and rurality.
Patients with COPD treated at private equity hospitals experienced a 0.2-day increase in length of hospital stay and a 0.9% increase in hospital revisits. Patients with pneumonia experienced a 0.7% increase in in-hospital mortality.
On first glance, that increase might seem small. But compared to the typical in-hospital mortality of around 3.5%, a 0.7% increase represents a 20% jump, Wadhera said.
Even as patient outcomes deteriorated, their clinical risk scores — a measure of underlying health complexity — remained stable throughout the study period. Sicker patients, the authors suggest, are not the problem, but rather a decline in the quality of care that followed the private equity takeover.
Buyouts by the Numbers
Wadhera’s study is the first to examine lung-specific outcomes, but the findings are consistent with a growing body of research that repeatedly finds that leveraged buyouts lead to worse outcomes for patients.
A 2023 study in JAMA reported a 25% increase in adverse events at the hospital, including a 27% increase in falls and a 38% increase in bloodstream infections, after a private equity buyout. In a 2025 study by the same group, emergency department death rates increased by 13.4% after acquisition, while emergency department salary spending simultaneously decreased by 18.2%.
Buyouts were associated with a 2.7-percentage-point increase in postoperative mortality compared with control groups, according to a 2025 study of surgical outcomes. The increase was driven by a 3.9% rise in “failure to rescue”— restoring patients who developed complications — despite no difference in complication rates.
And patients notice the difference. A 2025 study by Wadhera and colleagues found that patient care experience worsened by 5% after acquisition. “For context, that’s larger than the decline that happened during the COVID-19 public health crisis,” he said.
Because these studies consider outcomes before and after private equity moves in — a method called difference in difference — “that’s robust evidence showing private equity is the cause for the decline,” said Mitchell.
The declines in care are linked back to private equity’s penchant for profit. The investment groups offer a large cash infusion — often structured as debt — in exchange for operational control. They cut costs and dial in efficiency as a means to generate high profits over a short time, typically 3-7 years. It’s a shift that can fundamentally alter the way patient care is delivered.
Private Equity for All?
Beyond hospitals, private equity has produced mixed results. Hospice and nursing home care have seen devastating declines under private equity’s ownership. For some outpatient services, the jury is still out. A recent study by Mitchell and colleagues found that cancer clinics owned by private equity did not have higher use of low-value, high-profit cancer treatments. But a 2022 study of dermatology, gastroenterology, and ophthalmology practices found private equity buyouts were associated with increased healthcare spending and utilization.
“Private equity is not a monolith,” Wadhera said. Some firms are better than others, just as some healthcare settings are better suited to these types of investments than others. Even in hospital settings, there are good firms that improve care and firms that don’t change the quality of care when they take over, he added. The lower average outcomes associated with these investors could be driven by a smaller portion of bad actors.
But this reality only confirms the urgent need for better oversight. Private equity’s free rein to buy, optimize, and sell as they please needs immediate guardrails, experts agree. For starters, Wadhera said, the industry should be held to minimum staffing ratios, stronger antitrust regulations, and transparent ownership standards.
And still, experts question whether policy is enough.
“Clearly, we’re in need of innovation, different funding models,” Donald Sullivan, MD, health services researcher at Oregon Health & Sciences University in Portland, Oregon, said of the current healthcare system. Ideally, there’s a world in which private equity’s funding and strategy could help build a better and more sustainable healthcare system for patients. But it’s a long shot, he said, one that’s “antithetical” to private equity’s mission: profit.
Wadhera agreed, “We can do all these things from a policy standpoint, but is the incentive structure of private equity — generating returns over short time horizons before exiting — is that compatible with the long-term investments that good hospital care requires?”
The experts cited in this article had no relevant disclosures.
Donavyn Coffey is a Kentucky-based journalist reporting on healthcare, the environment, and anything that affects the way we eat. She has a master’s degree from New York University’s Arthur L. Carter Journalism Institute, New York City, and a master’s in molecular nutrition from Aarhus University in Aarhus, Denmark. You can see more of her work in WIRED, Teen Vogue, Scientific American, and elsewhere.
