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Private Equity Acquisition May Be Dangerous for Patients

March 1, 2024

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Written by Doug Wallace

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In a self-described “quasi-experimental” analysis of Medicare claims data, private equity owned hospitals were associated with a 25% increase in hospitalization-acquired adverse events when compared with non-private equity hospitals. Notably, there was a 27% increase in falls, a 38% increase in the volume of central line-associated infections, despite the placement of 16% fewer central lines, and a doubling of surgical site infections despite 8% fewer surgical procedures being performed (underpowered assertion). 

Private equity for the L
Private equity (PE) firm hospital acquisitions have been steadily increasing. Prior studies demonstrated that PE acquisition was associated with increased charges, reduced staffing, a focus on profitable service lines, and increased net income. Given the inherent focus of PE firms on generating positive financial returns, concerns have been raised about quality of care in these institutions. 

This “difference-in-differences design within an event study framework” complex statistical analysis compared 51 PE acquired acute care hospitals with 259 matched “control” (non-PE acquired) hospitals using Medicare Part A fee for service claims between 2009 and 2019. Hospital-acquired conditions were those delineated by Medicare.

Take home points were that PE hospitals demonstrated an increase of 4.6 hospital acquired conditions per 10,000 hospitalizations (25.4% increase) when compared with controls. Significant increases were noted in falls (27.3% increase), central line-associated infections (37.7% increase), and surgical site infections (147.8% increase, though limited by sample size and not statistically significant). This was despite relatively fewer central lines and surgical procedures being performed at PE hospitals. 

The authors note that PE acquired hospitals when compared with controls manifested a slight relative reduction of in-hospital mortality after acquisition. They attribute this to potentially younger and lower-risk patients being admitted to PE hospitals, though this seemed to be more conjecture than a data driven statement. Mentioned limitations include generalizability of the findings to all PE hospitals (i.e. HCA hospitals were excluded), patients with insurance other than Medicare, and unmeasured confounders.

How will this change my practice?
I don’t work at a private equity acquired hospital, and this study is unlikely to change my clinical practice. There was certainly some statistical wizardry here that warrants a deep dive, but I agree with the authors that these findings heighten concerns about the effect of private equity acquisition of hospitals on quality of care. This space would benefit from further investigation and increased regulatory oversight. 

Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition. JAMA. 2023 Dec 26;330(24):2365-2375. doi: 10.1001/jama.2023.23147.

What are your thoughts?