Just another business? .: Private equity in health services

Abstract

This chapter focuses on the role of Private equity (PE) firms in health services. It develops a conceptual model to explain why health services organizations are perhaps not “just another business” for PE investment, and use this model to explore the impact of PE in health services. In the shareholder approach, principals and agents are challenged to optimize financial interests to ensure long-term organizational competitiveness. This approach is widely used in the buyout and PE literature. The role of PE in such health services organizations raises a number of concerns. Their focus on financial performance can be at odds with the delivery of high quality health services. The chapter identifies certain knowledge gaps that could be addressed in future research. Research on the impact of PE in health services therefore needs to start from a stakeholder approach, as opposed to the “traditional” shareholder approach.