Inpatient Hospital Complications Increase After Private Equity Firms Take Over: Study

The findings of a new study suggest that patients face an increased risk of being injured or suffering from adverse health complications in hospitals that were recently taken over by a private equity firm.

In a report published in the medical journal JAMA Network Open on December 26, Harvard and Massachusetts General Hospital researchers warn that patients receiving care in a hospital bought by a private equity firm were more likely to fall, sustain infections or other health complications in the facility, and were hospitalized for longer periods of time, compared to those admitted to a publicly owned hospital.

Private equity firms are investment management companies, and many buy healthcare facilities using mostly borrowed money and some raised by investors. The borrowed money becomes debt against the newly acquired facility, which must then generate enough revenue to pay off the debt. To do this, they usually cut operation costs, reduce staff, perform more costly procedures, and charge higher health care fees to patients, despite the implications these changes may have on patient health.

Private Equity Hospital Complication Risks

In this latest study, a team of medical researchers reviewed Medicare Part A claim data between 2009 and 2019, comparing hospitalizations and patient health outcomes reported among 51 private equity–acquired hospitals to 259 public facilities. They also evaluated hospitalizations reported three years before and three years after a private equity firm took over a hospital

According to the findings, patients receiving care in private equity hospitals saw a 25.4% increase in hospital-related injuries and health complications, compared to those treated in a public hospital.

Researchers found that private equity hospital patients reported a 27.3% increase in falls, and a 37.7% increase in catheter-related bloodstream infections. These bloodstream infections increased in private equity hospitals despite a 16.2% decrease in line placement, compared to public hospitals. Surgical site infections also doubled among private equity facilities, even though they performed fewer procedures.

The findings suggest patients admitted to private equity firm hospitals receive poorer quality of care, often resulting in patients needing to be transferred to other acute care hospitals for further treatment.

Private Equity Firm Acquisition Concerns

Researchers have been concerned about private equity companies acquiring hospitals, nursing homes, and other health care facilities for years, as well as the implications the acquisitions have on patient health.

A prior study conducted in 2021 revealed findings similar to those found in the recent study, indicating patients residing in a private equity-owned nursing home were 9% more likely to be hospitalized, and 11% more likely to have emergency room visits.

Private equity nursing homes also charged residents 4% more, resulting in roughly $1,080 more in annual costs per patient, compared to other care facilities.