Does Private Equity Spike Adverse Events?

Private Equity

Private equity firms are back under fire for their impact on healthcare, this time for driving an outsized number of adverse events at the hospitals they acquire.

A large study published in JAMA showed that Medicare patients at hospitals acquired by private equity firms went on to experience significantly higher rates of adverse events – such as infections and falls – within just three years of the acquisition.

After comparing data from over 660k hospitalizations at 51 PE-owned hospitals to data from 4.2M hospitalizations at 259 non-PE-owned control hospitals from 2009 to 2019, researchers found that patients at the PE-owned hospitals experienced 25.4% more hospital-acquired adverse events (+4.6 events per 10k hospitalizations).

The increase in post-PE adverse events was driven by:

  • a 27.3% increase in falls 
  • a 37.7% increase in central line-associated bloodstream infections (despite PE-hospitals placing 16.2% fewer central lines)
  • a doubling of surgical site infections from 10.8 to 21.6 per 10k hospitalizations (despite an 8.1% reduction in surgical volume)

Another interesting finding was that the PE-hospitals had a slightly lower rate of in-hospital mortality than the non-PE-controls, which the authors said was likely because of the shift in patient mix once PE acquires a hospital.

  • Patients at the PE-hospitals were modestly younger, less likely to be dual eligible, and more likely to be transferred to other acute care hospitals after shorter lengths of stay.

The authors point out that many private equity firms take on heavy amounts of debt to acquire hospitals and flip them within a short timeframe, which has led to over $1 trillion of private equity investment flowing into healthcare within the last decade alone.

The Takeaway

This study is the latest addition to the growing mountain of research calling attention to private equity’s business-first perspective on healthcare, which often leads to the prioritization of revenue generation over things like… caring for patients. It might not take much longer for that attention to turn into action, with the Senate Budget Committee recently launching an investigation into the impact of PE hospital ownership and the consequences of post-acquisition cost-cutting.

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