Providence CDO Sara Vaezy

Providers

Does Private Equity Spike Adverse Events?

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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The Wire

• Cigna Pursues MA Talks With HCSC: The Wall Street Journal reported that Cigna is nearing an agreement to offload its Medicare business to Health Care Service Corporation for $3B to $4B, pushing forward with the divestiture despite last month’s Humana acquisition flop. Cigna currently offers Medicare plans in 29 states, and last reported having just under 600k MA members (accounting for $7.9B in 2022 revenue). An agreement would mark a major expansion for HCSC, dramatically expanding its reach beyond the five states where it’s the parent of Blue Cross Blue Shield plans.

• Devoted Closes $175M: Devoted Health ended its year on a high note with $175M in Series E funding, which it will put toward expanding its Medicare Advantage plans and virtual / at-home care services. The latest funding arrives two years after Devoted’s colossal $1.2B Series D round, with total membership now standing at over 140k after a 70% increase in 2023. Devoted operates health plans in 13 states, and it’s hoping that its strategy of keeping members healthier through additional services will allow it to build a sustainable business where others have struggled.

• Nurses Lead Quality Perceptions: Gallup released a survey on Americans’ evolving perception of care quality in various settings over the past two decades, which saw nurses consistently maintain a comfortable ratings lead (83% positive in 2023). Physicians trailed in a distant second with 69% positive ratings, although they’ve fallen a long way from the 81% notched in 2003. Traditional players like physicians, hospitals, and drug companies saw the largest declines, while the only setting to record an improvement was walk-in clinics (+2% to 56% positive).

• UnitedHealth Group Denial Controversy: UnitedHealth Group is once again in the spotlight for leaning on algorithms to deny care, and seniors seeking rehabilitation are bearing the brunt of it. A STAT investigation uncovered that UHG denied rehab care referrals to MA enrollees based on secret criteria that neither doctors nor patients were aware of, including whether the patient lived in a nursing home or suffered from cognitive impairment. The practice apparently ended last November ahead of CMS’ new plans to begin auditing denials later this year.

• Apple Watch Ban Saga: Apple had a drama-filled holiday break after Masimo’s successful patent dispute led to the ITC ordering an immediate halt to the import of the latest Apple Watches just before Christmas. That lasted for all of 24 hours, before a US Court of Appeals paused the ban until the customs office could issue its decision on Apple’s proposed redesign for the watches – expected on January 12. Masimo called the original ITC ruling “a powerful message” that the world’s largest company isn’t above the law, and we should find out whether that’s true or not in a couple more weeks.

• Cancer Screening Study Blowback: Several letters in JAMA Internal Medicine criticized a controversial 2023 study that made headlines for questioning the lifetime gains of most cancer screening exams. The letters challenged the research methodology used by Bretthauer et al to conclude that most screening exams lack justification because they weren’t proven to reduce all-cause mortality. The letters claim that Bretthauer et al itself was underpowered, had too short a follow-up period, and underestimated the proven drop in cancer mortality since the screening era began.

• Solera Expands Virtual Specialty Care: Solera Health is bringing virtual specialty care to its HALO unified benefits platform, courtesy of a string of new clinical partnerships focused on addressing high-cost conditions. HALO enables payors and employers to manage their point solutions within a single interface that makes it easy to compare each program’s effectiveness, and the latest additions to the platform include 9am.health (cardiometabolic care), Vori Health (musculoskeletal pain treatments), and Oshi Health (virtual digestive health center of excellence).

• A Practical Guide for Medical LLMs: AI-in-Health put out an impressively robust guide to Medical Large Language Models, with plenty of great info worth checking out whether you’re already well-versed in the tech or just LLM-curious. The guide provides a comprehensive overview of the applications and challenges faced by LLMs in healthcare, addressing topics ranging from common pitfalls during development to underexplored use cases in clinical practice. Better yet, it’s still getting regularly updated with the latest breakthroughs.

• Philips BioTelemetry’s False Claims Fine: Philips’ ECG monitoring company BioTelemetry and its subsidiary LifeWatch Services paid $14.7M to resolve allegations that they violated the False Claims Act by inflating reimbursement for remote cardiac monitoring. The US alleges that between 2014 and 2020, LifeWatch’s portal design and clinical training processes caused providers to unwittingly select telemetry monitoring, which has the highest reimbursement of any ECG monitoring service. LifeWatch also allegedly disregarded written notes from clinic personnel that specifically mentioned plans to use monitoring levels with lower reimbursement.

• knownwell Series A: Weight-inclusive primary care startup knownwell raised a $20M Series A led by a16z, bringing its total funding to $24.5M exactly one year after closing its seed round. knownwell takes a whole-person approach to obesity management, combining primary care with nutritional counseling, psychotherapy, and the hottest new drug class on the market. The press release also included the unveiling of “knownwell teens,” a new offering designed to destigmatize and improve access to obesity treatments for teenagers (GLP-1s are FDA-approved for ages 12+).

• Veradigm Acquires Koha Health: Veradigm acquired revenue cycle management company Koha Health to strengthen its portfolio of RCM services in the ambulatory care market, coincidentally landing the announcement on the same day that its investors slammed it with a new class action lawsuit. If the details that we covered in our last issue about the ousting of Veradigm’s CEO and CFO prove to be correct, it’s easy to see why investors are upset.

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