For-Profit Hospitals Out of Business? Financial Sustainability During the COVID-19 Epidemic Emergency Response

Document Type : Perspective


1 IQ Healthcare, Radboud University Medical Center, Nijmegen, The Netherlands

2 Ministry of Health, Welfare and Sport, The Hague, The Netherlands


This perspective argues that for-profit hospitals will be heavily affected by epidemic crises, including the current coronavirus disease 2019 (COVID-19) outbreak. Policy-makers should be aware that for-profit hospitals in particular are likely to face financial distress. The suspension of all non-urgent elective surgery and the relegation of market-based mechanisms that determines the allocation and compensation of care puts the financial state of these hospitals at serious risk. We identify three organisational factors that determine which hospitals might be most affected (ie, care-portfolio, size and whether it is private equity [PE]-owned). In addition, we analyse contextual factors that could explain the impact of financial distress among for-profit hospitals on the wider healthcare system.


Main Subjects

  1. Jeurissen P. For-Profit Hospitals: A Comparative and Longitudinal Study of the For-Profit Hospital Sector in Four Western Countries [thesis]. Rotterdam: Erasmus University Rotterdam; 2010.
  2. Hotopf M. COVID-19 and For-Profit Health Care. Healthcare Business International; 2020.
  3. Eurofound. Delivering Hospital Services: A Greater Role for the Private Sector? Luxembourg: Publications Office of the European Union; 2017.
  4. Kruse FM, Stadhouders NW, Adang EM, Groenewoud S, Jeurissen PPT. Do private hospitals outperform public hospitals regarding efficiency, accessibility, and quality of care in the European Union? a literature review. Int J Health Plann Manage. 2018;33(2):e434-e453. doi:10.1002/hpm.2502
  5. website. Accessed April 29, 2020.
  6. Reuters. BRIEF-Hca Healthcare Reports First Quarter 2020 Results. Reuters. April 21, 2020.  Accessed April 29, 2020.
  7. Hansmann HB. The role of nonprofit enterprise. The Yale Law Journal. 1980;89(5):835-901. doi:10.2307/796089
  8. de Boer W. Regievoerder gezocht voor het Nederlandse ziekenhuislandschap. Beleid Maatsch. 2019;4(46):481-489. doi:10.5553/BenM/138900692019046004009
  9. Thompson K, Taylor C, Forde K, Hammond N. The evolution of Australian intensive care and its related costs: a narrative review. Aust Crit Care. 2018;31(5):325-330. doi:10.1016/j.aucc.2017.08.004
  10. Bai G, Anderson GF. A more detailed understanding of factors associated with hospital profitability. Health Aff (Millwood). 2016;35(5):889-897. doi:10.1377/hlthaff.2015.1193
  11. Bos A. Corporate kangaroos in care. Strategy and Performance of For-Profit and Private Equity-Owned Care Organizations [thesis]. Utrecht: Utrecht University; 2020.
  12. Froud J, Williams K. Private equity and the culture of value extraction. New Political Economy. 2007;12(3):405-420. doi:10.1080/13563460701485656
  13. Appelbaum E, Batt R. Private Equity Buyouts in Healthcare: Who Wins, Who Loses? Institute for New Economic Thinking; 2020.
  14. Nolan L. Medical Care: Private Equity Seizes a Healthy Opportunity. Financial Times. October 30, 2012.
  15. European Centre for Disease Prevention and Control (ECDC). Situation Update Worldwide, As of 26 April 2020.  Accessed April 27, 2020.
  16. Kellermann AL, Martinez R. The ER, 50 Years On. N Engl J Med. 2011;364(24):2278-2279. doi:10.1056/NEJMp1101544
  17. American Hospital Association (AHA). Trendwatch Chartbook 2018. Washington, DC: AHA;2019.
  18. NHS England and NHS Improvement. Letter to chief executives of all NHS trusts and foundation trusts, CCG Accountable Officers, GP practices and Primary Care Networks, and Providers of Community Health Services. London: NHS; 2020.
  19. Salvador Illa Roco [El Ministro de Sanidad]. Boletín Oficial Del Estado I. Disposiciones Generales. Madrid: Ministerio De Sanidad; 2020.
  20. Deutsche Krankenhaus Gesellschaft (DKG). DKG zu den Aussagen des SPD-Experten in der Tagesschau Vorwürfe Lauterbachs inakzeptabel. 2020.
  21. Die Bundesregierung. Covid19-Krankenhausentlastungsgesetz. Kliniken und Praxen werden gestärkt 2020.  Accessed May 2, 2020.
  22. Morton A. Australia's Private Hospitals Face Closure After Coronavirus Causes Elective Surgery Ban. The Guardian. March 28, 2020.
  23. Scott Morrison [Prime Minister of Australia]. Elective Surgery 2020.
  24. Hunt GH [Minister for Health of Australia]. Australian Government partnership with private health sector secures 30,000 hospital beds and 105,000 nurses and staff, to help fight COVID-19 pandemic. Published 2020.
  25. Farbrother D. Why Aren’t For-Profits More Welcome in the Fight Against COVID-19? Healthcare Business International website.  Accessed April 3, 2020. Published 2020.
  26. OECD. OECD Health Statistics 2020. Health Care Resources. OECD; 2020.
  27. LiangBuisson. UK Healthcare Market Review. London: LiangBuisson; 2017.
  28. Sowada C, Sagan A, Kowalska-Bobko I, et al. Poland: health system review. Health Syst Transit. 2019;21(1):1-234. 
  29. Medicare Payment Advisory Commission (MedPAC). Report to the Congress: Medicare Payment Policy. Washington, DC: MedPAC; 2019.
  30. Stoye G. Recent Trends in Independent Sector Provision of NHS-Funded Elective Hospital Care in England. London: Institute for Fiscal Studies; 2019.
  31. Bernal-Delgado E, Garcia-Armesto S, Oliva J, et al. Spain: health system review. Health Syst Transit. 2018;20(2):1-179.
  32. Busse R, Blumel M. Germany: Health system review. Health Syst Transit. 2014;16(2):1-296.
  33. Glover L. The Australian Health Care System, 2015. In: Mossialos E, Wenzl M, Osborn R, Sarnak D, eds. International Profiles of Health Care Systems. Washington: The Commonwealth Fund; 2015.
  34. Competition and Markets Authority. Circle Health / BMI Healthcare Merger Inquiry.  Accessed April 25, 2020. Published 2019.
  35. Williams N. CVC Sells Spanish Private Hospital Operator in €5.8bn Deal. Private Equity International website.  Accessed April 25, 2020. Published 2016.
  36. Scheuplein C, Evans M, Merkel S. Übernahmen durch Private Equity im deutschen Gesundheitssektor: Eine Zwischenbilanz für die Jahre 2013 bis 2018. IAT Discussion Papers. 2019;19(1).
  37. Bain & Company. Global Healthcare Private Equity and Corporate M&A Report 2019. Boston, MA: Bain & Company; 2019.
  38. LaFrenz C. Shareholders back Brookfield's Purchase of Healthscope. Financial Review. May 22, 2019.  Accessed April 25, 2020.
  39. Fulton BD. Health care market concentration trends in the United States: evidence and policy responses. Health Aff (Millwood). 2017;36(9):1530-1538. doi:10.1377/hlthaff.2017.0556
  40. Autoritat Catalana de la Competència. Hospitales privados: análisis de concentración en Cataluna. Barcelona: ACCO; 2018.
  41. Schmid A, Ulrich V. Consolidation and concentration in the German hospital market: the two sides of the coin. Health Policy. 2013;109(3):301-310. doi:10.1016/j.healthpol.2012.08.012
  42. Palangkaraya A, Yong J. Effects of competition on hospital quality: an examination using hospital administrative data. Eur J Health Econ. 2013;14(3):415-429. doi:10.1007/s10198-012-0386-7
  43. Rój J. Competition measurement of hospitals in Poland: the Herfindahl-Hirschman Index approach. Ekonomika (Economics). 2016;95(1):166-181. doi:10.15388/ekon.2016.1.9912
  44. van Manen J, Meurs P, van Twist M. De aangekondigde ondergang. Onderzoek naar de faillissementen van het MC Slotervaart en de MC IJsselmeerziekenhuizen. The Hague: Commissie onderzoek faillissementen ziekenhuizen; 2020.
  45. Gondi S, Song Z. Potential implications of private equity investments in health care delivery. JAMA. 2019;321(11):1047-1048. doi:10.1001/jama.2019.1077
  46. Cuellar AE, Gertler PJ. How the expansion of hospital systems has affected consumers. Health Aff (Millwood). 2005;24(1):213-219. doi:10.1377/hlthaff.24.1.213
Volume 9, Issue 10
October 2020
Pages 423-428
  • Receive Date: 05 April 2020
  • Revise Date: 30 April 2020
  • Accept Date: 01 May 2020
  • First Publish Date: 01 October 2020