The convergence of finance and healthcare has always been fraught with ethical dilemmas and competing priorities. A recent study by Harvard Medical School, in collaboration with the Universities of Pittsburgh and Chicago and published in the Annals of Internal Medicine, has brought these tensions into sharp relief. The study found that mortality rates in U.S. hospitals increased after being acquired by private equity firms. For India, where private equity is rapidly investing in private hospitals, this finding serves as a timely warning. The results underscore the need for caution in balancing financial efficiency with patient care and safety.

The Harvard-led investigation compared 49 hospitals acquired by private equity firms with 293 non-acquired hospitals. Its findings revealed a clear pattern: staffing levels dropped significantly, with a reduction of nearly 12 percent in full-time employees, while salary expenditures were cut across departments. Emergency department salaries fell by 18 percent, ICU salaries by 16 percent, and hospital-wide expenditures by 16.6 percent. Alongside these financial adjustments, hospitals experienced shorter ICU stays, an increase in patient transfers, and—most alarmingly—higher mortality rates. The authors suggested that these clinical outcomes were linked to diminished staffing capacity, particularly in critical areas like emergency and intensive care.

The study was not the first to raise concerns. Earlier research published in the Journal of the American Medical Association (JAMA) highlighted that private equity acquisitions were associated with increased hospital-acquired infections, such as central line–associated bloodstream infections and surgical site infections. Another study in JAMA Internal Medicine examined the financial health of hospitals targeted by private equity firms and found that most were not financially distressed prior to acquisition. In fact, many had stable balance sheets, which made them attractive for cost-cutting and revenue optimization. This contradicted the common narrative that private equity comes in to rescue failing hospitals.

In the international context, the United States has seen a wave of private equity investment in healthcare, with more than $750 billion directed toward the sector since 2010. While proponents argue that these funds have modernized infrastructure and expanded service lines, critics point to short-term profit motives that prioritize shareholder returns over patient outcomes. Elizabeth Warren, U.S. Senator and a long-time critic of corporate healthcare practices, once remarked, “When private equity comes in, profits go up — but patient safety and jobs often go down.” In the United Kingdom, although private equity acquisitions are less pronounced, similar concerns exist around the outsourcing of services and the erosion of the National Health Service’s founding principle of equitable access. A BMJ review in 2022 cautioned that commercial incentives could undermine long-term patient care, even in systems where profit is not the central driver.

The Indian healthcare sector is undergoing a similar transformation. In the past five years alone, private equity firms have invested more than $6 billion in Indian hospitals and healthcare chains, according to a PwC India report. Major groups such as Apollo, Fortis, Narayana Health, and Manipal have attracted global investors. These investments have certainly enabled the expansion of infrastructure, particularly into Tier-2 and Tier-3 cities, and facilitated the adoption of advanced technologies such as telemedicine and AI-driven diagnostics. For hospitals struggling with insurance price caps and regulatory pressures, private equity has offered financial stability and operational sophistication.

However, the risks for India are significant. With an already strained doctor-patient ratio of 1:834 and nurse-patient ratio of 1:483, staffing cuts akin to those observed in the U.S. could have devastating consequences. Moreover, private equity’s emphasis on profitability may aggravate the rural-urban divide in healthcare access, as investors naturally gravitate toward metropolitan hospitals with higher revenue potential. Ethical concerns also loom large. If hospitals begin prioritizing revenue-generating services, such as elective procedures, over high-risk emergency care, the very foundation of patient-centered medicine could be compromised. Dr. Devi Shetty of Narayana Health has aptly warned that “Healthcare cannot be measured only by profit margins. Lives are not balance sheet entries.”

Private equity involvement in hospitals carries undeniable advantages. It injects capital into a system where many institutions struggle with underfunding. It brings efficiency by streamlining supply chains and adopting data-driven management practices. It funds digital innovation and allows hospitals to expand more quickly across geographies. Yet these benefits must be weighed against serious drawbacks. The drive for profitability often results in cost-cutting that undermines clinical quality. Hospitals may pass on higher costs to patients in the form of inflated bills, and reputational risks escalate when mortality or adverse event rates increase. Ultimately, the financial interests of investors may come into conflict with the ethical duty of care expected in medicine.

Examples from both the United States and India illustrate the delicate balance. In the U.S., one major private equity–backed chain saw infection rates rise after ICU staffing reductions. In India, the acquisition of Fortis Healthcare by IHH Healthcare demonstrated the efficiencies investors can bring, but it also raised concerns about affordability and transparency for patients. Global data suggest that hospitals targeted by private equity were not necessarily struggling before acquisition, which raises the question of whether these investments genuinely improve community health or simply create new opportunities for financial returns.

For policymakers and hospital leaders, several steps are essential. Regulatory safeguards must ensure that staffing and patient safety benchmarks are preserved after acquisitions. Transparency in reporting infection rates, staffing ratios, and patient outcomes should be mandated. Hospital boards should balance financial expertise with the presence of clinicians and patient representatives, creating governance that values health as much as profit. India, in particular, must tailor its approach by directing private equity capital toward underserved areas rather than only profitable urban centers. Incentivizing ethical investment through frameworks aligned with Environmental, Social, and Governance (ESG) principles could help align investor goals with public health priorities. As WHO Director-General Dr. Tedros Ghebreyesus has repeatedly stated, “Health is not a privilege for the few, but a human right for all.”

In conclusion, private equity has the potential to be both a boon and a bane for hospitals. It offers resources and managerial acumen but risks compromising patient care if financial returns dominate the agenda. The evidence from the United States is a sobering reminder of what can happen when efficiency is prioritized over humanity. For India, standing at the cusp of healthcare transformation, the lesson is clear: capital must never compromise care. Sustainable healthcare growth depends on balanced governance, where financial investments fuel progress but patient safety remains the inviolable cornerstone.

Dr. Prahlada N.B
MBBS (JJMMC), MS (PGIMER, Chandigarh). 
MBA in Healthcare & Hospital Management (BITS, Pilani), 
Postgraduate Certificate in Technology Leadership and Innovation (MIT, USA)
Executive Programme in Strategic Management (IIM, Lucknow)
Senior Management Programme in Healthcare Management (IIM, Kozhikode)
Advanced Certificate in AI for Digital Health and Imaging Program (IISc, Bengaluru). 

Senior Professor and former Head, 
Department of ENT-Head & Neck Surgery, Skull Base Surgery, Cochlear Implant Surgery. 
Basaveshwara Medical College & Hospital, Chitradurga, Karnataka, India. 

My Vision: I don’t want to be a genius.  I want to be a person with a bundle of experience. 

My Mission: Help others achieve their life’s objectives in my presence or absence!

My Values:  Creating value for others. 

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