Authors aim to quantify nonprofit hospitals’ spending on management consultants and to evaluate changes in finances, operations, and quality of care following the initiation of a contract with a management consulting firm. Observational study compares 306 U.S. nonprofit hospitals that used a management consultant firm for the first time in 2010-2022 with 513 matched hospitals that did not use management consultants during 2009-2023, measure financial performance (e.g., revenues, expenses, margins, cash reserves, and fixed assets), operational measures (e.g., inpatient utilization, staffing, executive and worker compensation, charity care, and community benefits), and quality-of-care measures (e.g., claims-based 30-day mortality and readmission for acute myocardial infarction, pneumonia, and stroke).

Findings: More than 20% of nonprofit hospitals hired management consultants during the study period. Nonprofit hospitals that hired management consultants collectively spent more than $7.8 billion on these services from 2009 to 2023. Despite this substantial investment, analyses of hospitals’ financial performance, operational decisions, and claims-based patient outcomes revealed little evidence of substantial, statistically significant, or systematic improvements attributable to consulting engagements.

This article features Ashvin Gandhi, affiliate at the UCLA Center for Health Policy Research (CHPR).