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Impact of Private Equity Ownership on Psychiatric Hospital Staffing and Quality of Care

Impact of Private Equity Ownership on Psychiatric Hospital Staffing and Quality of Care

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A new study reveals that private equity ownership of U.S. psychiatric hospitals is linked to lower staffing levels but some improvements in certain quality measures, raising questions about care quality and oversight.

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A recent study conducted by researchers at the Brown School at Washington University in St. Louis has shed light on the effects of private equity (PE) ownership in U.S. psychiatric hospitals. The research found that PE-owned facilities tend to have lower staffing levels, specifically fewer registered nurses and social workers per patient compared to non-PE hospitals. Despite this, these hospitals reported higher scores on certain quality metrics such as reduced use of physical restraints and better post-discharge follow-up procedures.

As of 2021, private equity firms owned approximately 14% of U.S. psychiatric hospitals, equating to over 100 facilities and more than 4,500 beds, with a notable concentration in southern states. These hospitals often focus on geriatric care and are less likely to serve children, adolescents, or forensic patients involved with the legal system.

While some quality indicators appear positive, Morgan Shields, lead author of the study, emphasizes that these metrics might be influenced by self-reporting biases or limited to specific patient groups. The study highlights the need for a more comprehensive understanding of care quality, especially since current measures may not fully capture patient safety or the quality of meaningful interactions with providers.

The study also notes that upcoming regulations by the Centers for Medicare and Medicaid Services (CMS) requiring psychiatric facilities to publicly report patient experience data could improve oversight and transparency in the future, expected around 2026 or 2027. Researchers stress that patients served by psychiatric hospitals are particularly vulnerable, often with limited choices and oversight.

Ultimately, the findings call for cautious interpretation of current quality reports and underline the importance of developing more accurate and holistic metrics to evaluate psychiatric care. The ongoing monitoring and reporting will be vital in understanding how ownership models impact patient outcomes and safety.

For further details, see the full study: Morgan C. Shields et al., "Private Equity Among US Psychiatric Hospitals," published in JAMA Psychiatry, 2025.

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