For any hospital chief executive witnessing the decline of the balance sheet, the proposal from a management consulting firm must be enticing to resist. Here, the partners assure, are individuals who have encountered every operational breakdown, every cost escalation, every revenue leak in the field, people capable of resolving issues (in a few months, they guarantee) that internal staff have battled with for years. The consultants come equipped with laptops and frameworks. They conduct workshops. They present decks. They depart with substantial payments. And according to the most comprehensive study ever carried out on the subject, they leave hospitals nearly precisely as they found them.
A paper released this week in JAMA has accomplished what a surprising number of individuals seemingly neglected to do: it actually analyzed the figures.
Joseph Dov Bruch, a health policy researcher at the University of Chicago, had a pragmatic reason to seek an answer. Students in his program continuously inquired whether a career in healthcare management consulting was a significant way to enhance the system. He discovered, to his dismay, that he lacked solid evidence either way. Thus, he and his colleagues began their investigation. They examined IRS Form 990 submissions, the detailed financial reports nonprofits must file each year, and utilized machine learning to pinpoint hospital contracts with management consulting firms over a twelve-year span. What they uncovered was, depending on your perspective, either completely predictable or quite remarkable.
A $7.8 Billion Indifference
More than one in five American nonprofit hospitals engaged a management consultant at some point between 2010 and 2022. Across the sector, the total expenditure reached at least $7.8 billion over a period of about a decade, with the average hospital disbursing $15.7 million for its engagement. This is money that could have been directed toward patient care, capital enhancements, or community health initiatives that nonprofit status is nominally intended to promote.
The researchers compared 306 hospitals that began their first consulting contract during the study period against 513 meticulously matched hospitals that did not, then monitored both groups across a range of financial, operational, and clinical metrics. Net patient revenue. Operating margins. Days of cash available. Inpatient length of stay. Staffing levels. Executive compensation. Thirty-day mortality and readmission statistics for heart attacks, pneumonia, and stroke.
Across nearly every measure, the outcome was the same: nothing. No statistically significant, systematic improvement linked to the consulting engagement. Operating margins didn’t shift meaningfully. Revenue didn’t increase. Hospitals didn’t become leaner or more efficient. “It’s not necessarily a waste,” Bruch remarked, “but we lack evidence of meaningful enhancements.”
The sole exception was minor and unwelcome: a slight rise in thirty-day readmissions among stroke patients. It was statistically significant, just barely, but the researchers noted it was not robust when they examined alternative model specifications, so it is likely noise. Still. Not the direction one would wish for.
Why the Evidence Gap Endured So Long
What makes the study genuinely peculiar, in hindsight, is how long it took for someone to conduct it. Management consultants have been a staple of American healthcare for decades, wielding influence that Bruch’s paper indicates is greater than in nearly any other sector of the economy. Hospitals have been transferring billions in tax-subsidized funds to these firms during a time when American healthcare faced intense political scrutiny regarding its costs and outcomes. Yet, as Bruch’s team illustrates, there was no prior large-scale empirical effort to assess what hospitals actually received in return.
Part of the explanation is practical: the data was not available in a usable format until someone dug through IRS filings with machine learning. Part of it may relate to something a bit more uncomfortable. Management consulting is a diffuse, relationship-driven industry where firms seldom publicize detailed records of their recommendations or rationales, and hospitals are reluctant to highlight instances where advice did not succeed. The entire arrangement relies on reputation and trust rather than documented outcomes, which is an unusual stance for an industry advising organizations whose fundamental mission is evidence-based medicine.
Bruch is cautious in his conclusions. “This initial analysis suggests that consultants may provide neither the dramatic efficiencies they claim nor the detriments that critics sometimes fear,” he stated. The framing is important: he is not asserting consultants are ineffective, only that the evidence of effectiveness is, to date, lacking. It is possible, he concedes, that consulting engagements influence factors the study couldn’t capture, or that benefits take longer to manifest than the study timeframe allows, or that some hospitals benefit while others suffer in ways that balance out overall. But the null result, spanning this many hospitals and metrics, is difficult to overlook.
What the Numbers Don’t Reflect
The paper’s scope is also intentionally restricted: it focused solely on management consultants, defined specifically, not the wider landscape of external expertise that hospitals procure. When the researchers broadened the definition to encompass HR and