Ownership of psychiatric hospitals in the United States by private equity (PE) is linked to reduced staffing levels, but also enhanced performance on specific quality indicators, according to a recent study from the Brown School at Washington University in St. Louis.

The research, “Private Equity Ownership of U.S. Psychiatric Hospitals,” featured in the journal JAMA Psychiatry, offers the first extensive examination of private equity’s influence in the psychiatric hospital sector.

“The involvement of private equity in behavioral healthcare has surged in recent times, yet our understanding of its impact on patient care remains limited,” stated Morgan Shields, the lead author and an assistant professor. “Often, psychiatric hospitals operate in a clouded and poorly regulated environment, making it essential to grasp how different ownership models shape internal practices.”

Here are some key findings from the study:

• Notable market integration: By 2021, 14% of U.S. psychiatric hospitals — over 100 facilities — were under PE ownership, accounting for more than 4,500 beds. Such ownership was particularly predominant in southern regions.

• Reduced staffing ratios: When compared with non-PE psychiatric hospitals, those owned by PE firms had significantly fewer registered nurses and medical social workers available for each patient. On average, they employed one less registered nurse for every 28 patients.

• Alterations in patient demographics: PE-owned psychiatric hospitals were more inclined to focus on geriatric care and less likely to cater to children, adolescents, or forensic populations, those who are involved in the legal system.

• Less concern regarding care quality: Hospitals owned by PE reported reduced occurrences of physical restraints and improved post-discharge follow-up and readmission statistics — although current quality data might be prone to misreporting or not adequately reflect aspects of quality that are most influenced by staffing and critical to patients, such as personal interactions and time with providers, according to Morgan.

Numerous metrics also depend on data self-reported by hospitals, which may be vulnerable to inaccuracies, strategic reporting, or restricted to certain patient groups. Additionally, variations in the patient demographics treated at these institutions may exist.

“Our findings do not inherently suggest that care is superior at a PE facility,” she noted. “Rather, the outcomes may unveil deficiencies in how quality is evaluated, raising alarms about how effectively the existing system captures the experiences and safety of psychiatric patients.”

“Although current quality metrics exhibit shortcomings, the Centers for Medicare and Medicaid Services (CMS) have recently mandated that psychiatric facilities collect and publicly disclose data on patient experiences,” mentioned Shields. “These data are expected to be available by 2026 or 2027.”

While national quality data are not yet made available in a consumer-accessible format, Shields cautioned that some information can still be found on the CMS website.

“The demographic served by psychiatric hospitals is particularly susceptible,” remarked co-author Susan Busch from the Yale University School of Public Health. “These patients often face limited options among facilities, their families have restricted opportunities to monitor care quality, and involuntary hospitalization is a real possibility.”

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