When private equity moves in, safety performance falls off

After being bought by private equity firms, hospitals tend to see significant increases in inpatient falls and infections, according to new research published in JAMA.

Researchers at Harvard Medical School and the University of Chicago arrived at the conclusion after comparing a decade’s worth of Medicare Part A claims data between 51 equity-acquired hospitals and 259 matched controls.[1]

The latter were hospitals not owned by private equity. The equity cohort comprised 662,000 hospitalizations; the control cohort, 4.2 million similar cases.

For the equity cohort, the team also assessed hospitalizations from three years before to three years after ownership changed hands.

Senior study author Zirui Song, MD, PhD, and colleagues found private equity acquisition correlated with a 25% increase in hospital-acquired adverse events through up to three years after acquisition. The adverse events included a 27% increase in falls and a 38% increase in the volume of central line-associated infections.

What’s more, the spike in central line infections occurred even though central-line placements fell by 16% in the post-acquisition equity cohort.

‘Particularly alarming’

The researchers also uncovered a doubling of surgical site infections in post-acquisition private equity hospitals. By comparison, surgical site infections fell at the control hospitals.

The researchers comment that the elevated surgical site infections at the post-acquisition equity hospitals were “particularly alarming” because these hospitals performed 8% fewer surgical procedures after acquisition.

Meanwhile, during the study period, 2009 to 2019, U.S. hospitals saw a collective decline in rates for all hospital-acquired infections.

Interestingly, Song and colleagues found the equity-owned hospitals had slightly lower mortality than their control counterparts. The authors suggest this may be explained by shifts in patient mix toward younger and fewer dually eligible beneficiaries admitted to the equity-owned hospitals, which also had more transfers to other hospitals.

Undermanned and overwhelmed?

Song et al. surmise the troubling safety performance at hospitals owned by private equity largely traces to staffing shortfalls.

Hospital-acquired adverse events “have been shown to be sensitive to staffing ratios and composition, specifically among nurses,” they remark in their discussion. More:

“Given that private equity firms have reduced staffing and changed the clinician labor mix at acquired hospitals and clinics, 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.”

The authors acknowledge several limitations in their study design. Among these is the difficulty of accounting for the targeted nature of hospital acquisitions by private equity firms. Given this, they write, “our findings remain susceptible to unmeasured confounding and do not imply causation.”

In coverage of the research by HMS’s news operation, lead author Sneha Kannan, MD, says the findings are discomfiting because they “may reflect bottom-line incentives overshadowing patient care and safety” at hospitals owned by private equity firms.

Hospital success, Kannan adds, is measured “not only in dollars or the number of patients who pass through the doors but also in lives saved, complication rates, patient satisfaction and a number of other quality and safety metrics. We need to make sure we fully understand the costs and benefits of this prominent new force in healthcare.”