Private equity ownership in Sweden’s primary care sector and its impact on healthcare quality and financial performance

Mikael Karlsson & Peter Lilja

Student thesis: Master thesis

Abstract

Over the past few years, private equity companies with investments in Swedish primary care have often been criticized for delivering inferior healthcare quality in order to improve financial performance. Following this on-going political debate regarding the suitability of private equity ownership in Swedish welfare, this study aims to investigate the relationship between private equity ownership, healthcare quality and financial performance. The study contributes valuable insights to the debate and related literature by comparing healthcare quality and financial performance for three Swedish private equity-owned care givers to the performance of other privately held and public primary care units. Insights into private equity ownership in welfare sectors are gained by applying the private equity model as a potentially explanatory factor to our findings. The methodology is primarily hypothesis-driven and secondary data on healthcare quality scores, financial performance and ownership types is gathered from publicly available databases. Furthermore, interviews are conducted to obtain insights into the public debate and potential explanations for our results. The research is divided into four main sections. Research part A investigates the relationship between ownership type, healthcare quality and potential differences in healthcare quality. Research part B analyzes financial performance for three large private equity-owned care givers relative to a representative peer group and research part C measures financial performance for five LBO’s in the Swedish primary care sector relative to a second representative peer group. Lastly, research part D consists of interviews and investigates private equity ownership in Swedish primary care from three main perspectives: company management, private equity professionals and employees. In terms of healthcare quality, private equity-owned care givers have on average outperformed public ownership but there are large differences in quality between private equity-owned care givers. In terms of financial performance, private equity-owned care givers have on average achieved higher revenue growth, but inferior results for other key profitability metrics, than other private care givers. Again, there are large variations between private equity-owned care givers. We conclude that the private equity model possesses valuable knowledge and concepts such as standardization, organizational flexibility, incentives and an aggressive growth strategy are key in increasing healthcare quality and financial performance.

EducationsMSc in Finance and Strategic Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2012
Number of pages130