Adverse events increased after hospitals acquired by private equity, study finds

A hospital’s acquisition by a private equity firm is linked to a rise in adverse events despite the pool of lower-risk patients they tend to admit, according to a Medicare Part A claims analysis published Tuesday in JAMA.

The study compared hundreds of thousands of hospitalizations at 51 private equity-acquired hospitals to data on millions of hospitalizations across 259 matched control hospitals from 2009 to 2019.

The combination of a 25% higher rate of hospital-acquired adverse events and beneficiaries who tended to be younger and less often dually eligible for Medicare and Medicaid led researchers to conclude that the 51 hospitals were delivering “poorer quality of inpatient care” after their acquisitions.

“These findings heighten concerns about the implications of private equity on healthcare delivery,” the Boston- and Chicago-based researchers wrote in the journal.

Specifically, through up to three years after hospital acquisition, the analysis shows a 27% increase in falls, a 38% increase in central line-associated infections and about twice as many surgical site infections compared to control hospitals—though the latter measure was “less statistically precise” due to a smaller sample size, the researchers wrote.

Contrasting the rise in adverse events was an almost decrease in hospital deaths among the acquired hospitals.

However, the researchers wrote that this improvement could be a result of the healthier, less poor pool of patients observed among the acquired hospitals, or potentially “that discharges of relatively sicker patients” as suggested by higher transfer rates “could have lowered in-hospital mortality through a selection effect.”

“In addition, the lack of improvement in 30-day mortality associated with private equity, especially given pre-acquisition trends that favored private equity hospitals, suggests that mortality effects are modest and at best mixed,” they noted.

The researchers highlighted previously documented links between hospital-acquired adverse events and hospitals’ staffing practices. Combined with private equity’s tendency to reduce staffing and adjust clinician labor mix, “an analogous cost-cutting strategy in our sample may help explain the increase in hospital-acquired conditions. These adverse events themselves can raise the risk of mortality, which highlights the clinical importance of this evidence,” they wrote.

The new study adds to critiques federal leaders have lobbed against private equity firms in recent years.

Earlier this month, both the Biden administration and key Senate leaders announced new efforts to tackle the negative effects of “corporate greed” (particularly private equity ownership) within healthcare.

The former unveiled a “cross-government public inquiry” to be coordinated by the Department of Justice, the Federal Trade Commission and the Department of Health and Human Services, as well as promises of new legal challenges against private equity roll-ups and other anticompetitive actions.

The latter comes by way of a Senate Budget Committee investigation into reports that private equity ownership of healthcare providers has contributed to deteriorating care.

Both efforts cited research data and news reports blaming private equity ownership for a range of specific issues affecting the healthcare industry, including contract labor price gouging, aggressive patient billing, reduced access, increased spending, reduced quality and dangerous consolidation.

Defenders of private equity have countered that these firms are vital to the healthcare industry for their role in increasing a healthcare organization’s scale and, subsequently, its bargaining power against other major players, such as large payers.