Hospital Adverse Events Rise After Private Equity Acquisition

Fri 29 Dec, 2023

                                                               By Heidi Splete

Hospital-acquired adverse events or conditions including falls and infections increased by approximately 25% after hospitals' acquisition by private equity compared with control hospitals, on the basis of a study of Medicare claims for more than 4,500,000 hospitalizations.

"Prior research on private equity in healthcare showed that acquisition is associated with higher charges, prices, and spending; however, the implications for quality of care and patient outcomes remained less understood," said corresponding author Zirui Song, MD, of Harvard Medical School, Boston, in an interview. "This was particularly true for measures of clinical quality that were less susceptible to changes in patient mix or coding behavior, such as hospital-acquired adverse events."

In the study, the researchers compared data from 100% Medicare Part A claims for 662,095 hospitalizations at 51 hospitals acquired by private equities and 4,160,720 hospitalizations at 259 control hospitals. The hospitalizations occurred between 2009 and 2019. The researchers also used a difference-in-differences design to evaluate hospitalizations from 3 years before to 3 years after acquisition, controlling for patient and hospital attributes.

Hospital-acquired adverse events as defined by the US Centers for Medicare & Medicaid Services included falls, infections, stage III or IV pressure ulcers, foreign objects retained after surgery, air embolism, and blood incompatibility.

Overall, Medicare patients in private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those in control hospitals through a period of up to 3 years after acquisition, with a difference of 4.6 additional hospital-acquired conditions per 10,000 hospitalizations (P = .004). Central line-associated bloodstream infections accounted for 37.7% of the increase (P = .04), despite a 16.2% decrease in placement of central lines, and falls accounted for 27.3% (P = .02).

Notably, the incidence of surgical site infections increased from 10.8 per 10,000 hospitalizations before acquisition to 21.6 per 10,000 hospitalizations after acquisition, despite a reduction of 8.1% in surgical volume. By contrast, surgical site infections decreased at control hospitals over the study period.

In-hospital mortality decreased slightly at private equity hospitals compared with the control hospitals, but there was no differential change in mortality by 30 days after hospital discharge. The slight difference might be caused by the trend in slightly younger Medicare beneficiaries treated at private equity hospitals; these patients were less likely to be eligible for both Medicaid and Medicare and were more likely to be transferred to other hospitals, the researchers noted.

The findings were limited by several factors including the lack of generalizability to all private equity-acquired hospitals and to non-Medicare patients, the researchers noted. Other limitations include the use of the International Classification of Diseases, Ninth Revision (ICD-9) and Tenth Revision (ICD-10) codes that might have failed to capture all hospital-acquired conditions and the inability to account for all confounding factors.

However, the results suggest that private equity acquisition was associated with increased hospital-acquired adverse events and highlight concerns about the impact of private equity ownership on healthcare delivery, the researchers concluded.

In a related story published in July 2023, a report showing an association between private equity ownership of medical practices and increased consumer prices for multiple medical specialties.

"Medicare patients admitted to private equity-owned hospitals experienced, on average, an 25% increase in hospital-acquired adverse events after the hospital was bought compared to similar patients at hospitals not acquired by private equity firms. We were surprised by the extent of this change relative to the comparison (non-private equity) hospitals, including the sizeable increase in central line-associated bloodstream infections and the doubling of surgical site infections at private equity hospitals — both of which went down at the comparison hospitals during the same period," said Song.

"A key implication is that patients, providers, and policymakers might be more attuned to the potential clinical impact of private equity ownership in the delivery system. Given that a plausible explanation for these findings is reductions in clinician staffing, clinical organizations and policymakers might also be more aware of cost-cutting strategies after acquisition," Song said. "Prior research has shown that hospitals, nursing homes, and physician practices experience staffing cuts after private equity acquisition, which is a common way to reduce operating costs and boost the profitability of acquired entities," he noted.

"More research is needed to understand the impact of private equity acquisitions across healthcare settings and the potential effects of policy levers that aim to protect patients and societal resources," said Song, who coauthored an article outlining a policy framework for addressing private equity in healthcare, published in April 2023. "Potential regulatory remedies include minimum staffing ratios, antitrust enforcement, mitigating the financial risk of such acquisitions, increasing the transparency of these acquisitions, and protecting patients and society from the higher prices of care attributed to this model of provider ownership," he said.

Patients Pay the Price of Private Equity Acquisition

"The exponential growth in private equity ownership in hospital and physician practices in the past few decades has left a majority of healthcare providers disillusioned with cost-cutting practices resulting in staffing reductions and ratios that sacrifice patient care as part of their approach to running clinical operations 'lean,'" said Robert Glatter, MD, an emergency medicine physician at Lenox Hill Hospital, New York, NY, in an interview.

"While private equity companies argue that such practices are essential to meet their bottom line and increase operating margins, it doesn't translate into ideal care for patients; lean practices in staffing which focus on profits at the expense of patient safety and quality of care."

"When you look at patient outcomes, it is the patients who ultimately pay the price — not the shareholders," Glatter said. "This translates to higher risks of hospital-acquired complications including falls and blood-borne infections, including surgical site infections, as noted by the authors of the current study when private equity took over operations in hospitals.

Glatter said he was not surprised by the findings. "In my world, patient care and safety come first. Period," he said. "Would you want your family's health and well-being sacrificed in the name of company profits? I think it's a rhetorical question, but one that every healthcare provider who works in a hospital or practice run by private equity must consider."

Despite a decline in utilization at private equity hospitals as noted in the current study, hospital-acquired infections and adverse outcomes still increased, illustrating a decline in quality of care, said Glatter. "While these disparities were not evident when looking at 30-day outcomes, they demonstrate how operational changes impact patient outcomes in the near term. Having younger and healthier patients, and fewer Medicare and Medicaid patients combined with more hospital transfers to non-private equity run hospitals, resulted in lower in-hospital mortality in the near term, which was not apparent at 30 days post discharge," he said.

"The explosion of hospital mergers and consolidation in the past several decades has led to skyrocketing healthcare costs at the expense of patient satisfaction, but also healthcare providers' autonomy to manage and maintain quality care for their patients," Glatter said.

"It's important to understand that private equity's interests are primarily aligned with their shareholder's interests, as opposed to patients' outcomes and interests," said Glatter. "Within 5-7 years, the goal is to increase operating margins and profits and then sell a practice or hospital, which is ultimately part of a 'healthcare portfolio,'" he said.

Additional research is needed to examine whether other hospital-acquired conditions including pressure sores, catheter-associated UTIs, methicillin-resistant Staphylococcus aureus infections, Clostridium difficile infections, and nosocomial pneumonia have increased in hospitals following private equity acquisition, given the overall national decline in these events, he said.

"At the same time, it is vital to also look at management and readmission rates for patients with strokes, heart attacks, and congestive heart failure in hospitals that are run by private equity," Glatter noted. "These are important benchmarks of care monitored by CMS that reflect the quality of care that payers ultimately factor into reimbursement."

Examining the metrics associated with these diagnoses will help in understanding whether private equity-managed facilities are leading to adverse outcomes and mortality, increased length of stay, hospital readmissions, and increased nosocomial infections, apart from other aspects of patient experience, Glatter added.

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