Recent Research in the Media
- Does Private Equity Harm Competition in the Hospital Industry?
In an article published in ProMarket on May 16, 2025, Brent Fulton discusses the role of lenders in acquisitions of hospitals by private equity firms.
During the past two decades, the number of U.S. companies owned by private equity firms has increased almost sixfold–from 1,900 to 11,200–including private equity firms owning almost 500 hospitals in the U.S. today. While private equity firms have been able to extract their capital prior to some hospital-system bankruptcies, the lenders have been overlooked in these bankruptcies. The capital extraction occurred because the lenders allowed the debt to be paid as a dividend, likely because debt covenants were relaxed by lenders chasing relatively few private equity deals and because hospital market conditions changed for the worse (with lenders pricing loans assuming some default risk). Hence, lenders bore the brunt of the losses.
However, patients bear the brunt of hospital service disruptions. Moreover, taxpayers sometimes bail out these hospitals. Fulton concludes by stating whether private equity-owned hospitals are a competitive model has yet to be determined–the impact of private equity on hospital quality is mixed–but regardless of the ownership model, regulation is needed to ensure transparent financing, along with price and quality transparency, because of the social contract that hospitals have with their communities.ProMarket is a publication of the Stigler Center at The University of Chicago Booth School of Business and is publishing a series of articles on the impact of private equity in health care. Here’s some information about ProMarket from its website. ProMarket is an academic forum focused on topics of special-interest capture, antitrust, political economy, and the future of capitalism. The vast majority of economists believe that competition is the essential ingredient that makes a market economy work. While a competitive market system ends up benefiting everyone, nobody benefits enough to spend resources to lobby for it. Business has very powerful lobbies; competitive markets do not. This is why we are ProMarket, rather than ProBusiness.
- Author Interview: “When Does Private Equity Ownership of Physician Practices Violate ‘First, Do No Harm’?”
Preethi Subbiah, research assistant and program coordinator for the Nicholas C. Petris Center, joins Ethics Talk to discuss her article, coauthored with Dr Richard M. Scheffler: “When Does Private Equity Ownership of Physician Practices Violate ‘First, Do No Harm’?”
Access the podcast, the transcript, and the article.
- The Curious Case of Private Equity in Health Care’s Market Failures
Richard Scheffler and Barak Richman discuss the crucial divide that lies ahead for policymakers interested in preventing the spread of PE-induced damage within the health care markets. The authors explain why the events of 2024 led to increased scrutiny led by the Biden administration and a few states pursing their own reforms.
To read the article, please click the link here.
- Hospital Consolidation Across Geographic Markets with Katie Gudiksen and Brent Fulton
Andréa Caballero, Vice President of Policy at Catalyst for Payment Reform, calls Katie Gudiksen, Executive Editor at The Source on Healthcare Price and Competition, and Brent Fulton, Associate Research Professor of Health Economics at UC Berkeley and Associate Director of the Petris Center to dissect the evolving landscape of hospital consolidation. They explore horizontal, vertical, and, crucially, cross-market mergers, providing context on their prevalence and challenging conventional wisdom around market definitions. The discussion highlights how consolidation, irrespective of type, demonstrably increases prices without corresponding quality improvements – a critical concern for purchasers.
To read more about the research discussed, please click the link here. Link to the podcast. - Dr. Arnold takes on new role at Brown University, remains as an Affiliated Scholar at Petris
After years of working with our Petris team as the director of research, Dan Arnold has moved to Brown University. We are thankful to Dan for all his many contributions to the Petris Center and are very pleased that he will continue to work with us as an affiliated scholar.
Dr. Arnold’s research focuses on the impact of health care consolidation on prices, quality, and
wages. He has published in Health Affairs, JAMA Health Forum, and Health Services Research
and his work has been cited by the New York Times, Los Angeles Times, and the San Francisco
Chronicle.He has assessed the likely competitive effects of health care mergers for the California Attorney
General, the California Office of Health Care Affordability, and the Connecticut Office of Health
Strategy.Dr. Arnold received his Ph.D. in Economics from the University of California, Santa Barbara
and his B.A. from Cornell University.
Recent Publications
- State Health Care Cost Commissions: Their Priorities and How States’ Political Leanings, Commercial Hospital Prices, and Medicaid Spending Predict Their Establishment
By Brent D. Fulton, Daniel R. Arnold, Jordan M. Wolf, and Richard M. Scheffler | Published May 26, 2025 in Milbank Quarterly | Link to Full Article
States are becoming increasingly concerned about rising health care spending because it crowds out budgets for education and other obligations and it burdens consumers, exposing them to medical debt and bankruptcies. This study identifies states that have established health care cost commissions (HCCCs), examines state-level political and economic factors associated with their establishment, and reports which of these states have also enacted health care competition-related laws that further equip these commissions. As of August 2024, 17 states had established HCCCs that aim to reduce the growth of health care costs using a variety of methods, such as collecting health care use and spending data and setting spending growth targets. States that lean politically Democratic were more likely to establish these commissions, particularly those states with higher commercial hospital prices or higher Medicaid spending as a share of the state budget, or both. States with HCCCs have also enacted competition-related laws but to varying degrees. Because health care reform is difficult to enact at the federal level, many states are enacting their own reforms, tailored to their needs and political feasibility with many establishing HCCCs to limit health care spending increases. Future research should study the impact of these commissions on health care spending that increases short-term spending yet moderates long-term spending, including the feasibility and impact of increased spending on primary care services as well as the impact of spending on new health care technologies. - Author Interview: “When Does Private Equity Ownership of Physician Practices Violate ‘First, Do No Harm’?”
Preethi Subbiah, research assistant and program coordinator for the Nicholas C. Petris Center, joins Ethics Talk to discuss her article, coauthored with Dr Richard M. Scheffler: “When Does Private Equity Ownership of Physician Practices Violate ‘First, Do No Harm’?”
Access the podcast, the transcript, and the article.
Petris Director Joins the Better Healthcare Policy Group
