Date of Graduation

5-2025

Document Type

Thesis

Degree Name

Bachelor of Science in Business Administration

Degree Level

Undergraduate

Department

Finance

Advisor/Mentor

Santamaria, Sergio

Abstract

In healthcare, private equity (PE) firms have rapidly expanded their presence across sectors, acquiring and consolidating providers. They typically operate on short investment cycles and employ strategies like heavy debt financing, roll-ups of fragmented practices, and aggressive cost-cutting to maximize returns. This expansion has sparked debate: supporters argue PE provides needed capital and efficiency to struggling providers, while critics contend that profit-driven ownership risks compromising care quality and access. This literature review synthesizes current evidence on how PE’s profit-driven approach affects patient care and healthcare costs. Overall, the findings suggest that PE ownership often raises costs—through higher prices and increased utilization—and can negatively impact care quality and patient outcomes. Case studies from nursing homes to hospitals reveal trade-offs such as reduced staffing, service cuts, and even increased mortality in some PE-owned facilities. At the same time, a few examples show that private capital can support expansion or innovation without harming care, indicating outcomes vary with management. The review highlights key policy implications, including the need for stronger regulatory oversight and transparency in ownership to mitigate negative effects. It also outlines areas for future research, such as understanding what practices can align PE investments with high-quality care. In sum, the thesis concludes that while PE brings new resources into healthcare, its pursuit of profit can come at a significant cost, warranting careful oversight and further study.

Keywords

Private Equity; Patient Care Quality; Healthcare Costs; Healthcare Policy

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