Measurement of Private Equity Ownership in Healthcare Research: Review and Opportunities

TL;DR

This paper reviews how researchers measure private equity ownership in healthcare and highlights the need for better data transparency.

Contribution

The study systematically reviews methods used to measure private equity ownership in healthcare and identifies gaps in capturing transaction heterogeneity.

Findings

Most studies use commercial databases or news searches to track private equity transitions.

Fewer than half of the studies examine the heterogeneity of private equity transactions.

Researchers increasingly combine multiple data sources to identify private equity transitions.

Abstract

Because ownership reporting requirements vary by healthcare entity types, PE ownership may not be publicly reported and researchers must rely on varying sources to measure PE ownership. We aim to understand measurement considerations relevant for examining PE in health care, including how researchers operationalize PE ownership of healthcare organizations, and to what extent the heterogeneity of private equity transaction (e.g., by boutique vs. general PE firms, different deal, or amount of debt financing) is studied in the literature. We systematically reviewed quantitative studies focused on PE and healthcare providers in the US published in years 2008-2023. We find that proprietary commercial databases and news/web searches are the two major approaches researchers used to identify private equity transitions. About 48% of the papers rely on commercial databases, and 14% of the papers use news releases and web searches to identify PE transitions. Additional 39% use a combination of commercial databases and news searches to construct their samples. Most papers often rely on a binary indicator of PE ownership, but do not study the heterogeneity effects of PE transitions. Overall, we find researchers increasingly rely on multiple commercial datasets to identify private equity transitions. However, most of the literature doesn’t discuss the potential discrepancy of PE definitions among data vendors. A more transparent and uniform database of PE and non-PE transactions, can facilitate studies on understanding nuance and heterogeneity that can facilitate a better design and regulation of PE transitions for all sectors of healthcare, including assisted living.