Managing Margins: PE Effects on Financial, Physical, and Human Capital

Michael R. Richards, Maggie Shi and Christopher Whaley

No 32840, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Private equity (PE) plays an increasingly important role in the modern US economy. However, its impacts on owned-firms are incompletely understood. We exploit a historically large leveraged buyout of a national hospital chain to examine how the full life cycle of PE influences hospital-level revenues, technology sourcing, labor use, and financial performance. We find permanent improvements in hospital volumes and revenues. PE also reduces growth in full-time employees, with a suggestive partial substitution toward part-time workers. Technology adoption is restrained, but the number of vendors expands. Overall, PE has nuanced effects on hospital management, which translate to improved operating margins.

JEL-codes: I11 I18 L20 L24 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-hea and nep-lma
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