Private Equity in Healthcare and Housing: The Real Evidence

Private equity's growing share of nursing homes, hospital systems, physician practices, and single-family rentals is the most consequential structural change in the US economy you don't read about. Eileen Appelbaum and Rosemary Batt's *Private Equity at Work* and the recent CEPR research establish the empirical pattern: PE ownership correlates with measurable harm to patients, residents, and tenants.

Private equity firms managed about $4.5 trillion in committed capital globally in 2024. The US share is roughly half. The funds' deployment has concentrated in particular industries — healthcare, residential real estate, education, retail — where the business model of buy-leverage-extract operates at scale. The empirical evidence on outcomes is increasingly robust and unflattering.

The Appelbaum-Batt Framework

Eileen Appelbaum (CEPR) and Rosemary Batt (Cornell ILR) published Private Equity at Work: When Wall Street Manages Main Street in 2014. The book's framework: PE acquisition typically involves substantial debt leverage placed on the acquired company, recurring management fees extracted by the PE sponsor, and a five-to-seven-year exit horizon. The combination produces predictable behavioral patterns: cost-cutting that may sacrifice long-term competitiveness, asset sales (particularly real estate held by the operating company), and price increases on captive customers when market structure permits.

The Nursing-Home Evidence

The 2021 NBER paper by Atul Gupta and co-authors used Medicare claims data to track outcomes at 1,674 nursing homes acquired by PE firms between 2005 and 2017. The findings: PE-owned nursing homes had 11% higher mortality rates, reduced staffing, and increased per-patient charges to Medicare. The methodology — comparing acquired facilities to similar non-acquired facilities, controlling for resident characteristics — produced unusually clean identification. The finding has been replicated in follow-up work using different data sources.

The Hospital Evidence

Sheng Jiang's 2024 JAMA paper documented that hospitals acquired by PE sponsors had 25% higher rates of hospital-acquired conditions (falls, infections, central-line complications) compared to comparable non-acquired hospitals. The mechanism: reduced nursing-staff ratios and increased reliance on contract labor. The 2018-2023 Steward Health Care collapse — Cerberus Capital's flagship hospital PE investment — illustrates the structural pattern at scale. Cerberus extracted approximately $800 million from Steward through sale-leaseback transactions before the company filed bankruptcy in 2024, leaving multiple state Medicaid programs and creditor hospitals to absorb the losses.

The Housing Evidence

PE-owned single-family rental firms — Invitation Homes, Tricon Residential, Progress Residential — collectively own about 350,000 single-family homes acquired predominantly during the 2010-2015 post-foreclosure window. Research by Desiree Fields and others documents higher rent-increase rates, higher eviction rates, and deferred maintenance patterns at PE-owned rentals compared to mom-and-pop landlords. The competitive effect on housing markets is contested; the resident-level effects are not.

What Policy Could Do

Three policy levers have been proposed. First, transparency requirements — current PE fund disclosures hide the ownership patterns from regulators and customers. The Stop Wall Street Looting Act, introduced repeatedly since 2019, would impose substantial disclosure obligations. Second, fiduciary duty extension — requiring fund managers to consider stakeholder impacts beyond limited partner returns. Third, antitrust attention to PE roll-up strategies — the practice of acquiring dozens of practices in a fragmented industry to build market power. The FTC's 2023 hospital-merger guidelines began this work; sectoral expansion has been limited.

The Honest Reading

PE's structural model — leveraged buyout, fee extraction, exit at higher multiple — is not inherently harmful and produces real efficiency gains in some sectors. The harms concentrate in sectors where the acquired companies have customers who cannot easily exit (patients, tenants, nursing home residents) and where short-term cost-cutting can defer quality consequences beyond the holding period. The policy implication is not that PE should be banned. It is that the same investor-protection, disclosure, and antitrust standards that apply to public markets should apply to PE-managed companies — and currently do not. The information asymmetry between PE sponsors and the customers, employees, and creditors of their portfolio companies is the core regulatory gap. Closing it does not require novel legislation; it requires applying existing standards to companies the current regulatory perimeter omits.