The Effect of Private Equity Leveraged Buyouts on Occupational Staffing in American Hospitals

Abstract

This paper investigates how private equity acquisitions influence hospital staffing levels across different occupational categories. Using full-time equivalent (FTE) headcount data from the American Hospital Association Annual Survey and a regression adjustment estimator, this study analyzes 380 hospitals acquired by private equity over a 21-year panel. Hospitals acquired by private equity experience a significant reduction in total FTEs across hospital departments and occupations, approximately 75 FTEs, which accounts for an 11% decline from pre-treatment averages. FTEs for RNs, LPNs, and physicians also decreased; however, the skill mix among nursing staff remained stable after acquisition. The treatment group was then divided into two subgroups—HCA hospitals and non-HCA hospitals—as a robustness check to examine heterogeneity within acquisitions. Non-HCA hospitals showed substantially larger estimates, indicating that the results for HCA hospitals may have muted the effects observed in the full treatment sample. These findings offer new evidence that private equity acquisitions lead to widespread staffing reductions that are not confined to a single area or occupation within hospital employment.