Dive Brief:
- Patients are more likely to experience adverse events, such as infections or falls, at hospitals owned by private equity firms, according to a recent study published in JAMA.
- Medicare beneficiaries admitted to PE hospitals had a 25% increase in hospital-acquired conditions compared to other hospitals. Despite the PE facilities often admitting lower-risk patients, patients at PE-backed hospitals had a nearly 38% increased chance of experiencing a central line infection and a 27% increased likelihood of falling than patients in control facilities.
- Researchers concluded that PE hospitals may deliver “poorer quality of inpatient care” post-acquisition, and said the data heightened concerns about private equity’s role in healthcare delivery.
Dive Insight:
Over the past decade, PE firms have set their sights on healthcare companies as an attractive investment opportunity, purchasing more than 200 hospitals from non-PE owners and spending $1 trillion to finance deals, according to the JAMA study.
PE firms typically buy hospitals in hopes of selling them within a few years for profit, the researchers noted. This model has generated wealth for investors, but garnered significant scrutiny from academics, providers and lawmakers.
Previous studies have found PE-owned healthcare facilities are generally associated with higher patient costs and reduced staffing. Some studies have associated PE ownership with higher short-term mortality rates in nursing homes.
The research has compelled lawmakers to launch investigations into the impact of private equity on healthcare. In December, two senators announced a bipartisan investigation into the impact PE firms have on hospital operations.
In November, Sens. Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn., sent a letter to PE-backed U.S. Anesthesiology Partners inquiring about their acquisition and pricing strategy.
The Biden administration has moved to cut down on private equity’s consolidation in the industry, announcing initiatives aimed at scrutinizing acquisitions and increasing transparency. In December, the Federal Trade Commission and Department of Justice also finalized merger guidelines that target PE roll-up acquisitions that could chill future deals.
Researchers in the JAMA study compared Medicare claims data for patients at 51 PE-backed hospitals and 259 hospitals of similar size and location for three years to review health outcomes.
They found a 38% increase in central line-associated infections — where germs enter patients’ blood from a tube placed in large veins in the neck, chest or groin — at PE-backed facilities. The increase in infections occurred even though those facilities placed 16% fewer central lines in patients than they did pre-acquisition, according to the study.
“Such increases in hospital-acquired infections may result from decreased staffing, changes in operator technique, poorer clinician experience, increased patient illness, or other explanations,” the authors wrote.
The authors noted the rise in infections at PE hospitals was particularly troublesome given that hospital-acquired conditions are decreasing nationwide.
However, not all stakeholders accepted the study’s findings.
In a blog post responding to the study, lobbying firm the American Investment Council called the study unfairly slanted.
“Private equity investments not only improve care, but also expands access to it: when compared to other for-profit counterparts, private equity-backed hospitals are more likely to serve low-income, rural communities, ensuring that rural residents and their families have access to high-quality, life-saving care,” the AIC response noted.
