Private Equity-Owned Hospitals Linked to Substandard Quality of Care

New research found that patients at private equity-owned healthcare facilities experience higher rates of adverse health outcomes than those receiving care in other hospitals.

In a study published on December 26 in the Journal of the American Medical Association, Harvard Medical School (HMS) researchers examined patient outcomes and quality of care in hospitals recently acquired by private equity firms. The team found that hospital-related adverse events — including falls and intravenous (IV) related bloodstream infections — increased by around 25% after a private equity took over a hospital.

"We had previously found that private equity acquisitions led to higher charges, prices, and societal spending. Now, we're learning that there are also downstream concerns for the clinical quality of care delivered to hospital patients," said study author Zirui Song, an associate professor at the Blavatnik Institute and director of research in the Center for Primary Care at HMS, in a Harvard press release.

To conduct the study, the investigators examined Medicare Part A claims data of more than 662,000 people hospitalized from 2009 through 2019 at 51 hospitals in the United States. The hospitals included were acquired by private equity firms between 2010 and 2017.

The researchers analyzed the frequency of hospital-related adverse events up to three years before and after a private equity acquired the facility and compared this data with 4,160,720 hospitalizations at 259 hospitals not owned by these firms.

After completing the review, the team found that hospitals recently acquired by a private equity firm experienced a 25.4% increase in hospital-acquired conditions — primarily due to falls and bloodstream infections. For example, the researchers observed a 37.7% rise in IV-related bloodstream infections even though these hospitals placed 16.2% fewer central lines after acquisition.

Moreover, surgical site infections doubled from 10.8 to 21.6 per 10,000 hospitalizations at private equity-owned hospitals despite an 8.1% reduction in surgical procedures after the firm took over the facility. In contrast, this type of infection decreased at hospitals not owned by private equity firms.

Still, the analysis also revealed that in-hospital mortality decreased slightly at private equity-owned facilities compared to control hospitals. However, the team found no differences in mortality up to 30 days after hospital discharge.

The study's authors say their findings heighten the concerns about the rise in private equity hospital ownership and the impact this may have on the quality of patient care.

Over the last decade, private equity investors spent $1 trillion on healthcare facility acquisitions, according to The Commonwealth Fund.

What is a private equity-owned healthcare facility?

A private equity firm is an investment company that purchases businesses using capital from investors or its own funds. Typically, these firms are not listed publicly or traded on the stock market and are not subject to the same regulations as public companies.

In contrast, a public investor-owned company is a public entity that trades shares on the stock exchange. An example of this type of entity is Universal Health Group.

Data from the Private Equity Stakeholder Project indicates that private equity firms own at least 386 hospitals in the United States — a third of which serve patients in rural areas.

Moreover, only a few firms dominate the list of private equity-owned hospitals. These include:

• Apollo Global Management (LifePoint Health, ScionHealth)
• Equity Group Investments (Ardent Health Services)
• One Equity Partners (Ernest Health)
• Surgery Partners (Bain Capital)
• Webster Equity Partners (Oceans Healthcare)

Types of facilities owned by private equity firms include non-specialty acute care and psychiatric hospitals, as well as rehabilitation and long-term care facilities.