Public to Private: The Overwhelming Privatization of Hospitals Nationwide

Have you ever seen a hospital in financial distress suddenly change its name and transfer ownership to some other entity? This is, to put it simply, the concept of privatization in healthcare. All over the United States, hospitals are either labeled as “public” or “private,” meaning that they’re either government owned or owned by a private not-for-profit or for-profit company. 

Each and every day, more and more hospitals are becoming part of the private equity sector, where even 80% of physicians from the past year are employed by private systems/corporations; that being a 60% increase from 2019 [1]. From this, we have to consider two crucial questions: Is the level of care received better under privatization? And the other: Is hospital privatization a growing monopoly in the healthcare world?

Many say that hospital privatization provides care based on the ability to pay instead of medical need [2]. This leads to one of the biggest problems with privatization, as private, for-profit hospitals require higher payments for care. With the inability to pay, it’s practically impossible for some people to get the treatment and care they deserve. A disproportionate amount of U.S. privatized hospitals are located in rural areas that have a lower median household income and a lower patient experience score [3]. The lower patient experience score comes from the lack of income or refusal to accept government insurance (i.e., Medicare, Medicaid), which, in turn, leads to the inability of patients to pay for care.

The fact that the majority of privatized hospitals are located in rural, lower socioeconomic areas alone is cause for concern. These private-equity firms aren’t trying to maximize patient care, but to maximize return on their investment,hospital profit over an extended period of time. Today, some of the largest hospital chains are owned by private equity firms and not the U.S. government, those of which being Lifepoint Health and Ardent Health Services [4].  

These firms are completely monopolizing the hospital system across the U.S., but some people still argue that hospital privatization produces net positives in healthcare. More specifically, they say that privatized hospitals are more efficient than their public counterparts. On average, the length of stay decreased from 5.82 to 5.10 days after privatization for a sample of U.S. hospitals in a 2003 study [5]. These hospitals were able to become more efficient after privatization and care for their patients in a more efficient time frame, due to funds that privatized hospitals have that public hospitals lack. This increased funding helps with efficiency and provides up to date medical technology for patients, reducing their stay.

While privatized hospitals are able to care for patients more efficiently and in a smaller time frame, they still lack the ability to treat high severity cases like public hospitals can. In over 29 cities across the U.S., public hospitals are able to provide all levels of trauma care and also operate over 44% of burn care units nationwide [6]. That being said, public hospitals only make up 2% of overall hospitals in the country, so the fact that they provide the majority of these important health services is something worth highlighting. Without public hospitals, underrepresented patients, such as those who are uninsured or do not qualify for government programs like Medicaid, would be without care. With the growing frequency of private equity owned hospitals across the country, public hospitals are crucial in maintaining cost-effective care for underrepresented groups.

Considering all these factors, it’s still important to understand both sides in this argument. While privatized hospitals can be detrimental to underrepresented patients and prioritize financial growth over patient satisfaction and care, they don’t always fail in terms of providing sufficient healthcare. The fact that the average patient stay in a private hospital is less than that of a public hospital means that, for the most part, private hospitals are doing what’s necessary for their patients to be healthy again.

On the other hand, the idea that privatized hospitals aren’t a part of a monopoly, solely due to positive performance, is another misconception. These private hospitals exist in “mixed markets,” where they’re created to increase patient care/make themselves desirable, as a way to maximize their profit [7]. 

Overall, the privatized hospital system is a monopoly that’s like a two sided coin. By prioritizing monopoly profit, privatization offers efficiency that the public hospital system does not. However, the tradeoff for efficiency is filtering out undesirable consumer patients who frequent hospitals and need extensive care. The only way to deal with the U.S. hospital monopoly is to understand that it is something constantly growing and innovating, although it negatively impacts a government-funded system.

Reviewed by: Amber Sun

Designed by: Maya Rachlin

References: [1] Physicians Advocacy Institute. (2024). Updated Report: Hospital and Corporate Acquisition of Physician Practices and Physician Employment 2019-2023. Avalere Health. https://www.physiciansadvocacyinstitute.org/Portals/0/assets/docs/PAI-Research/PAI-Avalere%20Physician%20Employment%20Trends%20Study%202019-2023%20Final.pdf?ver=uGHF46u1GSeZgYXMKFyYvw%3d%3d

[2] Angell, M. (2008). Privatizing health care is not the answer: lessons from the United States. Canadian Medical Association Journal. 179(9), 916-919. https://www.cmaj.ca/content/179/9/916.short

[3] Bruch, J., Zeltzer, D., & Song, Z. (2021). Characteristics of Private Equity-Owned Hospitals in 2018. Annals of internal medicine, 174(2), 277–279. https://doi.org/10.7326/M20-1361.

[4] Private Equity Stakeholder Project. (2025). Private Equity Hospital Tracker. https://pestakeholder.org/private-equity-hospital-tracker/#_ftn5

[5] Villa, S., Kane, N. (2013). Assessing the Impact of Privatizing Public Hospitals in Three American States: Implications for Universal Health Coverage. Value in Health, 16(1), S24-S33.

https://www.sciencedirect.com/science/article/pii/S109830151204154X

[6] American Hospital Association. (2017). The Value of Membership - Public Hospitals. AHA. https://www.aha.org/2017-05-11-value-membership-public-hospitals

[7] Levaggi, L., Levaggi, R. (2023). Competition in the provision of hospital care: Are mixed markets a valid alternative? Economic Modelling, 127. https://www.sciencedirect.com/science/article/pii/S0264999323002845