Nearly 1/2 of hospitals have investor ties to post-acute, hospice sectors

The influx of corporate investment in healthcare organizations over the past decade has resulted in a significant increase in the percentage of acute care hospitals which share common investor ties to the post-acute and hospice sectors, which could negatively impact competition, according to a study published in the September issue of Health Affairs.

The study, led by Harvard University health policy PhD candidate Annabelle Fowler, was described as the first description of common investor ownership trends in these three sectors. The data was compiled from PECOS, the system CMS uses to enroll eligible physicians and providers in Medicare and which collects information on investors with an ownership stake of at least 5 percent in those providers. The study also used CMS surveys to obtain geographic and beneficiary data.

Fowler and her coauthors calculated the proportion of acute care hospitals, skilled nursing facilities, and home health and hospice agencies that listed any corporate investor, health company investor, or chain home office in PECOS in 2005, 2010, and 2015. As corporate investment increased during the study period, so did the percentage of hospitals with at least one investor in common to another sector—jumping from 24.6 percent in 2005 to 48.9 percent in 2015.

Hospitals with investor ties to home health agencies increased from 14.7 percent to 32.9 percent, those with links to SNFs increased from 10.7 percent to 17.5 percent and those with common investors with hospices increased from 9.5 percent to 23.3 percent.

This common ownership has both negative and positive implications. Fowler and her coauthors said it’s possible a link between a hospital and a SNF could lead to improved outcomes like those shown in facilities which have been fully integrated, with the common investors creating an incentive to better coordinate care. On the other hand, the same concerns about consolidation in the healthcare industry would apply to these increasingly linked organizations.

“Within a sector, incentives for providers to compete are reduced when the providers share investors, as a portion of each provider’s profits is returned to common investors,” Fowler and her coauthors wrote. “For example, if a hospital and a skilled nursing facility in the same market have a common investor, the hospital might engage in referral patterns to the skilled nursing facility that could disproportionately increase costs or reduce revenues for competing skilled nursing facilities.”

Now that the level of common investor ties across sectors has been calculated, Fowler and her coauthors concluded the next step would be examine how these links affect prices and patient outcomes.