Cover: Private Equity and Healthcare Firm Behavior

Private Equity and Healthcare Firm Behavior

Evidence from Ambulatory Surgery Centers

Published in: Journal of Health Economics, Volume 91 (September 2023). DOI: 10.1016/j.jhealeco.2023.102801

Posted on May 13, 2024

by Haizhen Lin, Elizabeth L. Munnich, Michael R. Richards, Christopher M. Whaley, Xiaoxi Zhao

Healthcare firms regularly seek outside capital; yet, we have an incomplete understanding of external investor influence on provider behavior. We investigate the effects of private equity investment, divestment, and an initial public offering (IPO) on ambulatory surgery centers (ASCs). Throughput is unchanged while charges grow by up to 50% for the same service mix. Affected ASCs witness declines in privately insured cases and rely more on Medicare business. Private equity increases physician ASC ownership stakes, and both simultaneously divest when the ASC is sold. Our findings appear more consistent with private equity influencing the financing of ASCs, rather than treatment approaches.

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