Private Equity Among US Psychiatric Hospitals

Private equity (PE) ownership in health care has increased, but evidence for its association with health care quality is mixed. Moreover, there is no evidence regarding inpatient psychiatric hospitals, despite considerable patient vulnerabilities.

To describe trends in PE ownership of psychiatric hospitals from 2013 through 2021 and the cross-sectional association between PE ownership and hospital staffing and quality.

In this cross-sectional study, a novel dataset of PE ownership of psychiatric hospitals in the US was constructed using industry sources and web searches. Characteristics of 87 PE-owned psychiatric hospitals in 2021 were compared with 530 non-PE-owned psychiatric hospitals. Regression models were used to estimate adjusted differences in hospital staffing and quality. Participants included all Medicare-participating freestanding psychiatric hospitals in the US (N = 617). These data were analyzed from September 2023 to October 2024.

PE ownership.

Main outcomes were staffing ratios, national quality measures (restraint and seclusion rates, 7- and 30-day follow-up rates, postdischarge medication continuation, and 30-day all-cause readmission rates). Other studied characteristics included institutional characteristics (region, number of beds), services provided, measures of case mix (populations served, hospital average Diagnosis Related Group score among Medicare beneficiaries), occupancy rates, and average length of stay.

By 2021, of the 617 freestanding psychiatric hospitals in the US, 87 (14.10%), representing 4660 beds (6.30%), were PE owned, with two-thirds of PE-owned facilities in the southern US (63.22%). In adjusted models, PE ownership was associated with significantly lower staff per patient day among registered nurses (0.12 vs 0.15; P = .048 and medical social workers (0.02 vs 0.04; P = .005). Yet, PE-owned facilities performed better on quality measures, including lower reported hours of restraint use (0.03 vs 0.24 hours per 1000 patient hours; P < .001), 30-day readmissions (19.40% vs 20.16%; P = .047), and higher 7-day (29.34% vs 26.28%; P = .03) and 30-day (52.92% vs 49.08%; P = .01) follow-up visits.

PE ownership of psychiatric hospitals is growing rapidly. In 2021, these facilities had significantly lower staffing ratios, even after controlling for observable case-mix factors. No evidence of lower quality among PE-owned facilities was found, although existing measures are limited. Expansions of US Centers for Medicare & Medicaid Services quality measures to include patient experiences will provide information on new dimensions of quality in these facilities.