Atul Gupta, Health Care Management, The Wharton School; Jay Sastry, PhD Candidate, Healthcare Management, The Wharton School; Parker Rogers, Indiana University
Abstract: Private Equity (PE) investment in healthcare is growing rapidly. Because medical-technology firms shape healthcare innovation, spending, and quality—and rely heavily on public insurance reimbursements—PE ownership in this sector could have substantial long-term implications for innovation, costs, and patient outcomes. Yet most existing research on PE in health care focuses on care delivery, despite 63% of PE healthcare investments involving medical devices, pharmaceuticals, and biotechnology. Our study will provide, to our knowledge, the first causal evidence on how PE ownership affects innovation, pricing, financial performance, and product safety among medical-technology firms.
We will assemble and link comprehensive proprietary and public-use data on device-firm ownership, performance, and product portfolios, much of which we already have in hand. Our primary design is a matched difference-in-differences approach comparing acquired firms to carefully matched non-acquired peers. We will complement this approach with additional models to address identification concerns and to study heterogeneity in treatment effects (e.g., by deal structure).
We expect to produce multiple articles targeted at leading academic journals and to engage media, think tanks, and policymakers. The results will inform ongoing debates about oversight of PE and other forms of private investment in medical-technology firms.