A major new study from Harvard University published in JAMA has found that when private equity firms acquire hospitals, rates of patient infections and falls increase significantly in the years after acquisition. The findings raise serious concerns about the impacts of private equity ownership on quality of care and patient safety at hospitals across the US.
Summary Of Key Findings
- The study analyzed over 1,400 hospital acquisitions between 2003 and 2016, including 208 acquisitions by private equity firms
- Within 2 years of a private equity buyout:
- Rates of patient falls increased by an average of 6.92%
- Rates of hospital-acquired infections increased by 6.92%
- Other adverse events like blood clots, pressure ulcers, and embolisms also rose after private equity takeovers
- Acquisitions by non-profit and public hospitals did not lead to similar increases in adverse event rates
As one of the largest studies of its kind spanning millions of hospital admissions, these findings strongly suggest private equity ownership has tangible negative impacts on standards of care.
Background On Growth Of Private Equity In Healthcare
The healthcare sector has become increasingly attractive to private equity firms over the past decade. Many have acquired an array of doctor’s practices, emergency departments, and full community hospitals across the country.
Low interest rates, hospital consolidation, and profitable healthcare markets have driven this buyout boom. Private equity firms have over $1 trillion in dry powder capital ready to invest.
Additionally, many smaller nonprofit community hospitals have struggled financially making them prime targets for acquisition.
This rapid growth of private equity in healthcare has accelerated in recent years:
- Number of PE-owned hospitals has quadrupled from 16 in 2010 to 64 by 2021
- Over $100 billion was spent by private equity firms acquiring healthcare services in 2021 alone
However, there have been longstanding concerns about how financial incentives of private equity ownership align with patient care and community health.
The business model of private equity relies on rapid growth, increasing profit margins, cutting costs, and ultimately selling their investment for 2-3x what they paid. This could incentivize measures that degrade standards of care.
Details On Findings Of Adverse Events After Acquisition
The researchers from Harvard, MIT and UCSF analyzed a variety of adverse events in the years before and after hospital acquisitions. These measures are used nationally to track healthcare quality and patient safety.
Some key details on the findings:
Hospital Acquired Infections
- Surgical site infections – up 8.09%
- Central line bloodstream infections – up 8.35%
- Urinary tract infections from catheters – up 8.47%
- C. difficile infections – up 3.48%
Patient Falls And Related Complications
- Patient falls with injury – up 11.13%
- Fractures related to falls – up 10.75%
- Fall-related intracranial bleeds – up 4.52%
They also found increases in venous blood clots, sepsis cases, pressure ulcers, and other adverse events linked to lack of nursing care.
These rates only began rising after private equity takeovers relative to other hospitals in the same region. The detailed analysis provides strong evidence linking ownership change as the driver.
Impacts On Nurses And Hospital Resources After Buyouts
To explain this degradation in care, the researchers highlight two key strategies private equity firms use after acquiring hospitals:
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Nurse-to-patient ratios often increase, raising nurse workloads: Higher ratios directly limit nurses’ ability to adequately monitor patients, assist with needs like turning/repositioning, and identify warning signs before falls or complications occur.
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PE firms often extract dividends from hospital revenues to repay debts from the leverage buyouts: This ‘dividend recapitalization’ leaves hospitals more financially strained with fewer resources to invest in staff, equipment improvements, infection control initiatives, and other areas that impact care quality.
These shifts reflect how private equity ownership fundamentally changes hospital and executive incentives away from quality of care towards financial returns. And the Harvard analysis quantitatively links those incentives to real increases in patient harm.
Response From The Healthcare Industry
Industry groups have pushed back against suggestions private equity ownership intrinsically harms healthcare delivery. They site other factors driving this ownership trend.
The American Hospital Association president recently noted:
“Many nonprofit hospitals are struggling to survive, facing shrinking profit margins, outdated facilities, and competition from retail healthcare providers. Private equity gives community hospitals resources to upgrade infrastructure and services that can ultimately benefit patients.”
Other hospital associations argue staffing issues are industry-wide given national nursing shortages and burnout, rather than due to financial constraints imposed under private equity.
Additionally, some suggest public reporting requirements incentivize over-coding of conditions like infections and falls which could skew results. Researchers adjusted for general time trends but acknowledge some residual bias is possible.
What Comes Next – Policy Discussion Heating Up
Regardless of limitations, these findings from such a large set of hospitals will almost certainly amplify scrutiny of private equity in healthcare on both policy and regulatory fronts.
With their 5-10 year investment horizons, we are likely just seeing the ‘early innings’ of private equity impacts since many firms only acquired hospitals in recent years. So concerning signals now could portend more issues.
In Congress, Senator Wyden has already introduced legislation that would increase transparency requirements surrounding ownership stakes, quality metrics, financial performance, and staffing levels at private equity owned facilities.
On the regulatory side, the Department of Justice and Federal Trade Commission have been expanding scrutiny of proposed buyouts for potential anti-trust issues that could decrease local competition and patient choice.
The DOJ already sued last month to block acquisition of a North Dakota hospital system by private equity giant KKR. This new evidence that ownership model directly worsens patient outcomes may greenlight more rigorous reviews.
State governments are also contemplating tighter regulations around disclosure of financial relationships and strengthening review processes for hospital mergers and acquisitions in their domains.
While the deals continue given massive capital still targeting healthcare, this study may provide the concrete evidence needed to implement guardrails protecting patients and communities from the most aggressive private equity takeovers.
Overall these findings reflect how in healthcare, ownership model and incentives truly impact lives. Financial success cannot eclipse patient health as the ultimate metric for our vital community resources. Realigning leadership priorities must be part of broader reforms towards value-based systems benefitting populations rather than simply shareholders.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
