Private equity and healthcare firm behavior: Evidence from ambulatory surgery centers

• Published in: Journal of health economics 2023-09, Vol.91, p.102801-102801, Article 102801
• Main Authors: Lin, Haizhen, Munnich, Elizabeth L., Richards, Michael R., Whaley, Christopher M., Zhao, Xiaoxi
• Format: Article
• Language: English
• Subjects: Aged; Ambulatory surgery centers; Ambulatory Surgical Procedures; Commerce; Delivery of Health Care; Humans; Investments; Medicare; Outpatient surgery; Physician ownership; Private equity; United States
• ISSN: 0167-6296; 1879-1646; 1879-1646
• DOI: 10.1016/j.jhealeco.2023.102801

•Study examines private equity (PE) investments in ambulatory surgery centers (ASCs).•ASC healthcare delivery is largely unchanged after PE involvement.•Charges for services do increase over time.•Physician equity stakes in ASCs sharply and substantially increase after PE invests.•Physician and PE investors exist their ownership positions simultaneously. 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.