Private equity (PE) ownership of psychiatric hospitals in the United States is associated with lower staffing levels, but also higher performance on certain quality measures, finds a new study from the Brown School at Washington University in St. Louis.
The study, “Private Equity Ownership of U.S. Psychiatric Hospitals,” published in the journal JAMA Psychiatry, is the first comprehensive look at private equity’s penetration into the psychiatric hospital market.
“Private equity’s presence in behavioral health has increased significantly in recent years, yet we know little about its effect on care,” said Morgan Shields, an assistant professor and the study’s lead author. “Psychiatric hospitals are often opaque and underregulated, making it critical to understand how ownership models influence what happens inside.”
Some highlights from the study:
- Significant market penetration: As of 2021, 14% of U.S. psychiatric hospitals — more than 100 facilities — were owned by PE firms, representing over 4,500 beds. Ownership was especially concentrated in southern states.
- Lower staffing ratios: Compared to non-PE psychiatric hospitals, PE-owned facilities had significantly fewer registered nurses and medical social workers per patient. On average, they staffed one fewer registered nurse per 28 patients.
- Shifts in patient demographics: PE-owned psychiatric hospitals were more likely to specialize in geriatric care and less likely to serve children, adolescents or forensic populations, patients who are also involved with the legal system.
- Fewer concerns regarding quality of care: PE-owned hospitals reported lower rates of physical restraints and better post-discharge follow-up and readmission metrics — though current quality data may be subject to misreporting or not aligned with those aspects of quality most affected by staff and most important to patients, such as relationships and one-on-one time with providers, Morgan said.
Many of these metrics also rely on self-reported data from hospitals, which may be subject to misreporting, strategic documentation or limited to certain patients. In addition, there may be differences in the patient populations treated at these organizations.
“Our results don’t necessarily mean care is better at a PE facility,” she said. “Instead, the results may reflect gaps in how quality is measured, and raise concerns about how well the current system captures the lived experience and safety of psychiatric patients.”
“While there are gaps in current quality measures, the Centers for Medicare and Medicaid Services (CMS) recently started requiring psychiatric facilities to collect and publicly report patient experience data,” Shields said. “Those data should be released in 2026 or 2027.”
While national quality data are not yet reported in a consumer-friendly manner, Shields warned, some data can nevertheless be accessed on the CMS website.
“The population served by psychiatric hospitals is particularly vulnerable,” said co-author Susan Busch of the Yale University School of Public Health. “These patients often have limited choice among facilities, their families have limited ability to observe quality of care and there is the possibility of involuntary hospitalization.”
