Compared to their peers, hospitals acquired by private equity reduced salary spending, cut staffing levels and experienced higher mortality rates within their emergency departments, according to a Medicare claims analysis published this week in Annals of Internal Medicine.
The research, which reviewed data from 2009 to 2019, also found salary and staffing cuts among the acquired hospitals’ intensive care units, but, unlike EDs, there was no significant difference in mortality compared to other hospitals. Patient transfer rates increased in both settings among the private-equity-acquired hospitals, particularly among sicker patients, and ICU length of stay decreased.
The analysis from University of Chicago, Harvard Medical School and University of Pittsburgh researchers is the latest contribution to a body of peer-reviewed evidence critical of private equity’s increasing presence among healthcare providers. It also follows a similar analysis from 2023 conducted by many of the same authors that spotted a rise in hospital-acquired adverse events among inpatients receiving care at a private-equity-acquired facility.
“Staffing cuts are one of the common strategies used to generate financial returns for the firm and its investors,” the study’s senior author Zirui Song, M.D., Ph.D., associate professor of healthcare policy at Harvard Medical School and an associate professor of medicine at Massachusetts General Hospital, said in a release. “Among Medicare patients, who are often older and more vulnerable, this study shows that those financial strategies may lead to potentially dangerous, even deadly consequences.”
This week’s analysis reviewed Medicare Part A and Part B claims from more than a million ED visits and 121,000 ICU hospitalizations among 49 hospitals acquired by private equity and compared them to nearly 6.2 million ED visits and more than 760,000 ICU hospitalizations among 293 matched control hospitals. The researchers pulled additional numbers, such as those on staffing, from hospital cost reports, and identified private equity firm acquisitions with a combination of regulatory filings, proprietary market analysis software and public press releases. Eligible hospitals were acquired between 2010 and 2017, with the researchers reviewing data from before and after the transaction for changes.
That approach showed, among the private equity hospitals and compared to controls, an 18.2% reduction in per inpatient bed day ED salary expenditures and a 15.9% reduction among ICUs. The reductions came alongside hospitalwide employment reductions of 11.6% and a 16.6% drop in salary spending.
In the ED, private equity hospitals’ baseline of 52 deaths per 10,000 visits rose by seven additional deaths, or a 13.4% increase, the researchers found. That increase came without any clear changes in the observable characteristics of those hospitals’ patients, they added.
Though they acknowledged limitations in their analysis — such as the exclusive use of traditional Medicare beneficiaries and no comparisons between private equity acquisitions and other types of dealmaking — the researchers pointed to reduced salary spending as a possible, and likely, culprit for worsened ED outcomes.
“Our findings support concerns that staffing reductions may, on average, compromise the ability of a hospital to provide care, rather than provide the same care ‘more efficiently,'” they wrote in the journal.
Recent years have found increased public calls for limits on private equity in healthcare delivery, with hospital shutdowns from the bankruptcies of private-equity-backed corporations like Steward Healthcare and Prospect Medical Holdings serving as high-profile examples of mismanagement.
