Dive Brief:
- Patients may be more likely to die in private equity-owned hospital emergency departments than similar, non-private equity run facilities, according to a study published in the Annals of Internal Medicine on Tuesday.
- Researchers found private equity acquisitions were associated with a 13% increase in mortality on average among Medicare beneficiaries in emergency departments. They attributed the increase to staff cuts after private equity buys, which reduced the ability of facilities to care for high-risk patients.
- “Staffing cuts are one of the common strategies used to generate financial returns for the firm and its investors,” said senior author Zirui Song, associate professor of healthcare policy in the Blavatnik Institute at Harvard Medical School. “Among Medicare patients, who are often older and more vulnerable, this study shows that those financial strategies may lead to potentially dangerous, even deadly consequences.”
Dive Insight:
The research adds to the growing chorus calling for more oversight of private equity in healthcare. The investor-based, private ownership model has been used to purchase hundreds of hospitals and nursing homes over the past decade, along with thousands of physician practices, according to the study.
Private equity firms typically buy hospitals in hopes of selling them within a few years for profit. This model has generated wealth for investors, but garnered significant scrutiny from academics, providers and lawmakers.
Part of the concern lies in allegations that private equity owners cut resources and degrade care quality.
The current study draws upon data from 49 private equity hospitals and 293 non-private equity owned hospitals between 2009 and 2019.
Researchers found emergency department salary expenditures declined by 18%, while salaries were cut by 16% in ICUs after facilities were acquired by a private equity firm. Although ICU mortality did not change, sicker ICU patients were more likely to be transferred to other hospitals.
The staffing cuts may have decreased the ability of facilities to care for high-risk patients, according to the report.
“Our findings support concerns that staffing reductions may, on average, compromise the ability of a hospital to provide care, rather than provide the same care ‘more efficiently,’” authors wrote in the journal.
Other studies have likewise found decreases in care quality after private equity acquisitions. Song’s previous research, for example, found private equity ownership is associated with an increased incidence of preventable adverse events, including infections, which were also likely related to staffing cuts.
State and federal policymakers have recently begun efforts to regulate private equity acquisitions in healthcare, with Massachusetts and Oregon passing laws, and Pennsylvania eyeing similar reform.