The Dangers of Private Equity Ownership in the Healthcare Industry: A Recent Study Unveils the Risks Faced by Patients
Private equity ownership of hospitals amplifies patient risk, reveals study Healthcare hazards escalate as private firms acquire hospitals, per new research Stay informed with CNN Health's weekly newsletter
A new study published in the journal JAMA revealed that patients at hospitals acquired by private equity firms are at greater risk of serious medical complications. The study examined 10 adverse events associated with medical care at 51 hospitals before and after they were purchased by private equity firms, and compared the rates with 259 hospitals not owned by private equity firms.
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Private equity firms have been purchasing substantial portions of the US health care delivery system. This includes not just hospitals, but also nursing homes, behavioral health systems, and private physician practices. Studies have revealed that private equity ownership is linked to higher mortality rates for nursing home patients and increased expenses for taxpayers. The Senate Budget Committee has recently initiated a bipartisan investigation into the effects of private equity acquisitions on health care facilities. In total, researchers examined the results of nearly 5 million hospitalizations, sourced from Medicare claims data, with at least three years of data on each hospital.
These complications are commonly known as "never events" as they are preventable errors that should never happen during routine medical care. Examples include leaving foreign objects in the body after surgery, mismatching a patient's blood type, falls, infections at specific surgical sites, blood clots post-joint replacement surgeries, and pressure sores. The study was conducted due to the lack of understanding on how the private equity firms' purchase of hospitals may affect patient care, despite evidence showing increased billing rates after such acquisitions.
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Following acquisition by private equity firms, hospitals experienced a 25% rise in hospital-acquired complications for patients, according to the study. Dr. Zirui Song, the study author, attributed this increase to a 27% rise in falls, a 38% increase in central line infections, and a doubling of surgical site infections. These complications were more prevalent on general floors, in the ICU, and post-surgery.
Despite private equity-owned hospitals inserting approximately 16% fewer central lines, the increase in central line infections still occurred. Dr. Song, an associate professor at Harvard Medical School, expressed concern over the significant and troubling average change in all areas of the hospital during an interview with JAMA editors.
The ownership of a private equity firm could potentially reduce patient care. According to Song, although Medicare claims data alone cannot provide a clear answer to this question, previous research has indicated that these types of acquisitions are often associated with staff reductions and the replacement of higher-paid workers, like doctors and nurses, with lower-paid employees. "So reduced staffing is one potential mechanism that has been documented in the private equity context," Song stated.
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The patient demographics at private equity-owned hospitals changed slightly over the study years. Generally, there was a trend toward treating fewer patients eligible for both Medicare and Medicaid benefits, indicating a shift towards patients with lower incomes. Private equity hospitals also began admitting slightly younger patients and were more inclined to transfer patients to other acute care hospitals.
Song also noted that clinical decision-making may be impacted by acquisition by private equity firms.
"Typically, we find that healthcare providers working directly with patients make decisions that significantly affect the clinical outcomes of Medicare beneficiaries," Song explained. He emphasized the need for further investigation into the potential impact of financial factors associated with private equity ownership on clinical decision making. Song also expressed hope for similar studies to be carried out in various healthcare settings, including doctor's offices, telehealth, and behavioral health practices."
