Thomas C. Buchmueller, PhD1,2,3; Helen G. Levy, PhD1,2
JAMA
Published Online: May 4, 2026
doi: 10.1001/jama.2026.4362
In a well-publicized case that stoked public outrage, Providence, a nonprofit health system headquartered in the state of Washington, implemented a program in 2018 called Rev Up to increase revenue collection from patients.1 Following enforcement action by the state’s attorney general, Providence was ultimately forced to refund or forgive nearly $160 million worth of payments and outstanding debt,2 but not before throwing the management consultants behind the program squarely under the bus. “The intent of Rev Up, a program developed with the consulting firm McKinsey & Company, was not to target or pressure those in financial distress…We recognize the tone of the training materials developed by McKinsey was not consistent with our values.”3
Was Providence’s experience with McKinsey an outlier? In this issue of JAMA, Bruch and coauthors4 report on their systematic study of the effects associated with management consultants for nonprofit hospitals. The authors constructed an impressive database that combined detailed financial information from hospitals’ Internal Revenue Service Form 990 with measures of financial performance, operations, and outcomes for all nonprofit hospitals in the US spanning the years 2009 through 2023. In the Form 990 data, it is possible to identify most large contracts ($100 000 or more) with outside consultants and, for a subset of the contracts, to characterize the focus of the engagement.
The analysis shows that over this period, nearly one-quarter of nonprofit hospitals engaged a management consulting firm at least once, with an average total payment of about $6.2 million. In a matched comparison with otherwise similar hospitals that did not engage consultants, the analysis finds that hiring a consulting firm had essentially no effect on hospital finances, operations, or patient outcomes.
A superficial reading of these results is that on average, management consultants do not do much for nonprofit hospitals beyond consuming resources (which is, at least, not as bad as the cautionary tale of Providence and McKinsey). But there is likely more to the story.
An obvious concern with the study’s difference-in-differences approach, which the authors acknowledge and do their best to address, is that hospitals do not randomly decide to spend more than $100 000 on consulting. Hospitals that engage a consulting firm to improve financial performance are likely to include ones facing financial difficulties, which can have spillover effects on health outcomes and patient satisfaction. This would mean that the results may understate positive effects that consultants might have on outcomes. The event history analyses, which show generally similar patterns for hospitals that do and do not engage consultants prior to the start of the consulting contract, are reassuring but do not definitively rule out this type of selection bias. One productive direction for future research would be to investigate the factors that predict a hospital’s decision to hire a consulting firm.
In addition, some of the estimates have wide confidence intervals. Although it is accurate to say that the analysis shows no statistically significant improvements in finances, operations, or quality of care, for several outcomes, fairly large effects cannot be ruled out. For example, engagement of consultants may have increased or decreased Medicaid inpatient days by as much as 10%; charity care may have declined by 13% or increased by 20%; and chief executive officer salaries may have increased by as much as 20%.
The article also presents results that distinguish among different types of consulting contracts—quality of care, staffing, finances, technology, or mergers and acquisitions—for the approximately one-third of contracts for which it was possible to identify the nature of the engagement. Although the smaller sample size makes these estimates even more imprecise than the main results, drilling down into the substance of the contracts is likely a promising avenue for future research. For example, one-quarter of the contracts for which the purpose could be identified concerned “integrating or advancing technological capabilities.”4 Given the timing of the data, many of these likely involved implementing electronic health records systems in response to the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act.
On one hand, this study’s null results are in line with a research literature that finds that health care information technology has generally not delivered a large payoff in terms of greater efficiency or improved health outcomes.5 On the other hand, information technology implementation involves large initial outlays (including payments for consulting services), while the benefits may take time to be realized. And the benefits may be in specific areas that, while not reflected in aggregate data, are extremely important. For example, a study found that the implementation of electronic medical records led to a reduction in in-hospital infant mortality, driven by a reduction in deaths from conditions requiring careful monitoring.6 As a result, even successful implementation may not be evident based on the data and research design of this study. Qualitative research could be helpful to better understand the reasons that hospitals hire consultants and whether the engagement was successful in achieving specific goals.
Another important extension will be to consider spending on consultants in the context of overall administrative costs. All hospitals need someone to run them. But are consultants being used judiciously by hospitals that otherwise run a lean administrative shop? Or are consultants a symptom of administrative bloat? Again, there is likely to be heterogeneity, and the marginal value of consultant engagement may be highest at the extremes, where in-house administration is either too much or too little.
As one of the first studies of its kind, this article raises as many questions as it answers. We applaud the authors’ success in laying the groundwork for more research that can improve understanding of how nonprofit hospitals balance financial and social objectives.
Article Information
Published Online: May 4, 2026. doi:10.1001/jama.2026.4362
Conflict of Interest Disclosures: None reported.
References
1. Silver-Greenberg J, Thomas K. They were entitled to free care. Hospitals hounded them to pay. New York Times. Published September 24, 2022. Accessed February 25, 2026. https://www.nytimes.com/2022/09/24/business/nonprofit-hospitals-poor-patients.html
2. Washington State Office of the Attorney General. Providence must provide $157.8 million in refunds and debt relief for unlawful medical charges to low-income Washingtonians. Published February 1, 2024. Accessed February 25, 2026. https://www.atg.wa.gov/news/news-releases/ag-ferguson-providence-must-provide-1578-million-refunds-and-debt-relief
3. Providence. Statement in response to a story published in the New York Times on September 24, 2022. Accessed February 25, 2026. https://blog.providence.org/regional-blog-news/facts
4. Bruch JD, Fang CC, Zeng YB, Parthan A, Gandhi AD. Changes in nonprofit hospitals’ finances, operations, and quality of care after using management consultants. JAMA. Published online May 4, 2026. doi:10.1001/jama.2026.5027
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5. Bronsoler A, Doyle J, Van Reenen J. The impact of health information and communication technology on clinical quality, productivity, and workers. Annu Rev Econ. 2022;14(1):23-46. doi:10.1146/annurev-economics-080921-101909Google ScholarCrossref
6. Miller AR, Tucker CE. Can health care information technology save babies? J Polit Econ. 2011;119(2):289-324. doi:10.1086/660083PubMedGoogle ScholarCrossref
Article link: https://www.linkedin.com/posts/editorial-by-thomas-buchmueller-phd-share-7457086638964490240-R68d?
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