A recent study of 306 nonprofit hospitals that contracted with a management consulting firm for the first time found no substantial improvements in finances, operations or patient care compared to hospitals that did not use a consultant.
Seven things to know:
1. U.S. nonprofit hospitals collectively spent more than $7.8 billion on management consulting services between 2009 and 2023, with annual spending more than doubling from $273.2 million in 2009 to $732.9 million in 2023.
The study, “Changes in Nonprofit Hospitals’ Finances, Operations, and Quality of Care After Using Management Consultants,” was published May 4 in JAMA.
2. Researchers from the University of Chicago, Brown University in Providence, R.I., the University of Wisconsin-Madison and University of California Los Angeles used a stacked difference-in-differences design to compare 306 nonprofit hospitals that used a management consulting firm for the first time between 2010 and 2022 with 513 matched hospitals that did not use a firm from 2009 to 2023.
3. Approximately 21% of nonprofit hospitals hired management consultants during the study period. Hospitals that hired consultants paid an average of $15.7 million for their services, with each contract averaging $6.2 million and lasting an average of 1.4 years.
4. Of the 108 contracts researchers were able to characterize, the most common objective was enhancing financial performance (64.8%), followed by integrating or advancing technology (27.8%), improving quality of care (24.1%), reorganizing staffing (13.9%) and assisting with a merger or acquisition (13.0%). Objectives were not mutually exclusive.
5. Despite this investment, the study found no statistically significant or systematic improvements in financial performance, operational decisions or claims-based patient outcomes attributable to consulting engagements.
6. Quality-of-care outcomes were largely unchanged, with the sole exception of 30-day readmission for patients with stroke, which increased by 1.37 percentage points among hospitals using consultants. That finding was not robust to alternative specifications, and after adjusting for multiple comparisons, no difference-in-differences estimate across the study’s 26 outcomes remained statistically significant.
7. The researchers concluded that while nonprofit hospitals spend significant amounts on consultants, there was no evidence of meaningful changes in finances, operations or quality of care.
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