Nonprofit hospitals spend billions on consultants with no clear effect
A JAMA study—the first large-scale empirical look—finds $7.8B in nonprofit hospital consulting spend over 2010–2022 produced no significant improvements in finances, staffing, operations, or patient outcomes.
What Matters
- 306 hospitals initiating consultant contracts were matched against non-hiring peers; no statistically significant changes found across any major metric.
- Average hospital spent $15.7M on management consultants; total rises above $25B when HR and IT consultants are included.
- The sole detected effect was a small increase in stroke readmissions—a slight negative signal.
- IRS Form 990 filings and machine learning identified contracts; over 20% of nonprofit hospitals engaged consultants during the period.
- [HN: @hahajk] Consultants are hired for decision insurance, not optimization—if a bet goes wrong, blame is diffused; hiring them is rational even when outcomes are neutral.
