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Private Equity Hospital Purchase Raises Risks for Patients

A new study in JAMA of 5 million hospitalizations over 10 years at 300 US hospitals found that private equity acquisition was associated with a 25% rise in serious adverse clinical events, likely due to fewer employees. Private equity strategies in health put patients at risk.

December 29, 2023

Serious Medical Errors Rose After Private Equity Firms Bought Hospitals
The New York Times
December 26, 2023
By Reed Abelson & Margot Sanger-Katz

The rate of serious medical complications increased in hospitals after they were purchased by private equity investment firms.

The study, published in JAMA, found that, in the three years after a private equity firm bought a hospital, adverse events including surgical infections and bed sores rose by 25 percent among Medicare patients when compared with similar hospitals that were not bought by such investors. The researchers reported a nearly 38 percent increase in central line infections, a dangerous kind of infection that medical authorities say should never happen, and a 27 percent increase in falls by patients while staying in the hospital.

“This is a big deal because it’s the first piece of data that I think pretty strongly suggests that there is a quality problem when private equity takes over,” said Dr. Ashish Jha, the dean of Brown University School of Public Health, who has studied hospital safety extensively.

Over the last two decades, private equity firms have become major players in health care, purchasing not just hospitals but also a growing number of nursing homes, physician practices and home health care companies. The firms pool money from institutional investors and individuals to form investment funds, often buying hospitals and other entities through high levels of debt, with an eye to reselling them in a few years.

Several media reports have shown that some of the acquired hospitals have been forced to close because of financial distress, and some have come under regulatory scrutiny for quality problems.

The researchers examined a range of errors that Medicare tracks. All of the eight individual measures studied in the paper worsened in the hospitals purchased by private equity funds.

“They are preventable adverse events that everyone thinks shouldn’t happen in hospitals,” said Dr. David Blumenthal, the former president of the Commonwealth Fund.

The researchers said the most likely explanation for the increased errors was fewer hospital employees.

Changes in Hospital Adverse Events and Patient Outcomes Associated with Private Equity Acquisition
December 26, 2023
By Sneha Kannan, Joseph Dov Bruch, Zirui Song

Key Points

Question How do quality of care and patient outcomes change after private equity acquisition of hospitals?

Findings In a difference-in-differences examination of 662 095 hospitalizations at 51 private equity–acquired hospitals and 4 160 720 hospitalizations at 259 matched control hospitals [from 2009-2019] using 100% Medicare Part A claims data, private equity acquisition was associated with a 25.4% increase in hospital-acquired conditions, which was driven by falls and central line–associated bloodstream infections.

Meaning Private equity acquisition of hospitals, on average, was associated with increased hospital-acquired adverse events despite a likely lower-risk pool of admitted Medicare beneficiaries, suggesting poorer quality of inpatient care.

Comment by: Don McCanne

Haven’t we heard enough? Study after study has shown that when private equity, with its primary mission of creating wealth for its investors, takes control of sectors of health care, our costs of health care increase and our access and quality of health care outcomes deteriorate. Meanwhile, other studies demonstrate that a well-designed single payer system would not only control costs and improve outcomes, but would make health care equitably accessible for everyone.

Why do we give our health care dollars to billionaires for their own personal enrichment while we tolerate mediocrity and worse in our health care system – when we could take those same health care dollars and spend them much more efficiently in creating a health care nirvana for all of us? It is true that it will require a legislative solution, but the legislators must understand that that is the demand of their constituents. Isn’t it?

Editor: Happy New Year. Next post will be the 2023 summary.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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