File 09 · The respectable cut · 1989–2026
The consultant layer
Private equity is the loud version. The consultant is the version invited into the boardroom of a nonprofit hospital, a city, a university, or a news chain that wants the same cuts without the reputation. McKinsey, BCG, Deloitte, and their peers sell a neutral instrument: benchmarking, span-of-control, a ‘transformation office.’ The instrument reliably finds labor. Sometimes the client is a fund’s portfolio company. Sometimes the client is a public agency. The most documented moral disaster in the trade is McKinsey’s work for Purdue Pharma, helping to push OxyContin, later settled for hundreds of millions of dollars. That is not a hospital staffing study. It is evidence about whose problem the work is designed to solve.
A leveraged buyout and a pro-bono-sounding ‘performance transformation’ can recommend the same smaller night shift. Only one of them gets called vulture capitalism in the paper.
Findings
- Opioids
- Hundreds of millions
- Hospitals
- Labor is the lever
- Government
- The rented state
In 2021 McKinsey agreed to pay about $573 million to settle claims by states that its advice helped Purdue ‘turbocharge’ OxyContin sales. Further settlements followed. The firm did this work in slides, not in a factory.
Health systems — PE-owned and not — hire strategy firms to find savings. In a hospital, supplies and drugs are partly outside local control. Staffing is the number a six-week engagement can move before the final presentation.
Agencies hire the same firms to design programs, run IT procurements, and, at times, advise enforcement bureaucracies. The capacity never quite sticks. The next contract does.
The playbook, in this industry
- 01
Arrive as expertise, not ownership
No sale-leaseback, no public villain. A board asks for an outside view. The outside view speaks the board’s language: peers, benchmarks, gaps.
- 02
Find the cost that blinks
Benchmarking against a leaner peer makes today’s staffing look like a choice. The peer may be unsafe. The slide does not always include falls, infections, or unread public meetings.
- 03
Leave an office behind
A transformation office, staffed by the client and coached by the firm, keeps cutting after the partners roll off. The fee is paid. The night shift is not hired back.
- 04
Work for both sides of a harm
The Purdue engagement is the extreme: advice that increased sales of a drug that killed people. Smaller versions are ordinary — restructuring a company while advising the industry that regulates it, or billing a city to fix a procurement the last contract complicated.
Incidents
1980s–90s
Strategy becomes a mass product
The firms grow up alongside the buyout industry. One side owns. The other narrates. Companies learn to want a deck before a decision so the decision has a cited source.
2000s–10s
Purdue and McKinsey
McKinsey advises Purdue on sales strategy for OxyContin, including how to respond to pressure on high-prescribing doctors. The work becomes public through lawsuits in the opioid cases.
2021
The settlement
States announce roughly $573 million from McKinsey. It is a fraction of opioid harm and a large number for a professional-services firm. The slide business continues.
2020s
Same cuts, nicer letterhead
Hospital boards under financial stress — some of it from the PE models in the other files, some of it from insurer power and labor costs — hire consultants to do quickly what a sponsor would demand contractually. The public meets the result as a closed unit, not as a slide title.
Case files
A consulting engagement inside an overdose crisis
McKinsey and Purdue
Court documents and state lawsuits described McKinsey’s role in Purdue’s sales push with unusual clarity, because emails and decks were discovered. The advice targeted revenue from a drug already under fire. In 2021 the firm settled with states for about $573 million and later reached further agreements. No patient hired McKinsey. Patients, and public Medicaid budgets, lived inside the consequences of a sales strategy written as professional services. It belongs on this ledger because it shows the outer bound of ‘we only advise’: the invoice was for thinking, and the thinking had a body count.
The public bill. A settlement in the hundreds of millions, against a crisis measured in lives and public dollars.
Hospitals and public agencies
The transformation office
Sit in on enough board meetings and the sequence is familiar. Margins tighten. A firm is retained. Weeks later a steering committee sees a waterfall chart in which nursing, environmental services, or case management is the savings. The people who would know whether the peer benchmark is safe are not in the room, or they are there to react to a draft already called the opportunity. Private equity uses this work to justify cuts to lenders. Nonprofit systems use it to justify cuts to themselves. Cities use it to justify contracting out work the city then cannot supervise. The letterhead changes. The smaller staff does not.
The public bill. A thinner service, purchased as expertise, with the fee leaving the building and the risk staying.
What the public lost
Cost
- Consulting fees paid by hospitals, insurers, universities, and governments — often from public or tax-favored money
- Cuts that outlive the engagement
- Opioid sales advice settled for roughly $573 million, against harm many times larger
Access
- Units closed or desks emptied because a benchmark said so
- Public agencies that rent their own judgment and then cannot fire the dependency
- A language of ‘efficiency’ that makes less service sound like maturity
The owners’ argument
Consultants do real work: implementation help, IT that in-house teams cannot staff, an outside check on a complacent management. Many engagements are ordinary and some are useful. The objection is not that advice exists. It is that the industry’s prestige converts contested choices — fewer nurses, fewer reporters, a more aggressive sales target — into apparent facts, and that nobody in the waiting room can cross-examine a slide.
Sources
- State attorneys generalMcKinsey’s 2021 opioid settlement, about $573 million, over Purdue consulting
- Court filings in the Purdue bankruptcy and state casesDecks and emails describing McKinsey’s OxyContin work
- The other files on this siteHospital, nursing-home, and newsroom cuts that used the same labor logic, with or without a fund