When Private Equity Comes to Town: The Local Economic Consequences of Rising Healthcare Costs
By Cyrus Aghamolla, Jash Jain, Richard Thakor
Citation
Aghamolla, Cyrus., Jain, Jash., Thakor, Richard. (2025). When Private Equity Comes to Town: The Local Economic Consequences of Rising Healthcare Costs .
Copyright
2025
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Abstract
We examine the effect of increased healthcare costs on local economic conditions. We use private equity buyouts of hospital systems as a shock to the healthcare costs faced by firms in affected areas. We provide evidence that private equity buyouts of hospital systems result in higher healthcare insurance premiums paid by firms, and such rises in premiums lead to higher business bankruptcies, an increase in business loan volume, slower employment and establishment growth, and reduced innovative output. The effects are more pronounced in areas with less competitive hospital markets, higher labor intensity, and fewer insurers providing coverage.
Jash Jain is an Assistant Professor of Finance at the Indian School of Business (ISB). He received his PhD in Finance from the Carlson School of Management at the University of Minnesota. His primary research interests are in corporate finance, with a specific focus on healthcare finance, household finance, and financial intermediation. His current research explores the economic consequences of rising healthcare costs for households and firms.
Before his doctoral studies, he earned his BA(Hons) in Economics from Delhi College of Arts and Commerce at Delhi University, and an MS in Quantitative Economics from Indian Statistical Institute, Kolkata.
Jash Jain