Financial Impacts And Operational Implications Of Private Equity Acquisition Of US Hospitals

Cerullo, Marcelo; Lin, Yu-Li; Rauh-Hain, Jose Alejandro; Ho, Vivian

doi:10.1377/hlthaff.2021.01284

Cited by 7 publications

(24 citation statements)

References 30 publications

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“…Our findings add new clinical insights to the literature on private equity and quality, which has focused on aggregate process quality measures. [7][8][9][10]15 The 38% increase in central line-associated infections associated with private equity acquisition occurred even as these hospitals placed 16%…”

Section: Discussionmentioning

confidence: 99%

“…The hospital-acquired conditions (delineated by Medicare in 2009) were (1) foreign object retained after a surgery, (2) air embolism, (3) blood incompatibility, (4) stage 3 or 4 pressure ulcers, (5) falls and trauma, (6) catheter-associated urinary tract infections, (7) central line-associated infection, (8) surgical site infections from coronary artery bypass graft surgeries, (9) surgical site infections from bariatric surgeries, (10) surgical site infections from certain orthopedic procedures, (11) manifestations of poor glycemic control (diabetic ketoacidosis and hypoglycemic coma), and (12) deep vein thrombosis (DVT) or pulmonary embolism (PE) after total knee and hip replacement procedures 24 (additional details appear eTable 3 in Supplement 1). In addition, a composite hospital-acquired condition measure was calculated that included an unweighted sum of all hospital-acquired conditions within each hospitalization.…”

Section: Hospital-acquired Conditionsmentioning

confidence: 99%

“…Private equity firms have increasingly acquired hospitals and physician practices . This has garnered scrutiny from policymakers and the public, including the Biden administration and several US Senate and House committees .…”

Section: Introductionmentioning

confidence: 99%

“…rivate equity firms have increasingly acquired hospitals and physician practices. [1][2][3][4][5][6][7][8][9][10] This has garnered scrutiny from policymakers and the public, including the Biden administration and several US Senate and House committees. [11][12][13][14] Central to the concern over such acquisitions are the implications for patients-notably the quality of care-given the incentives of private equity to generate financial returns on investment quickly.…”

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confidence: 99%

“…Within private, nongovernment hospitals, private equity has an often distinct business model, in which the acquired entity typically assumes debt in the initial acquisition and is sold within a short time frame (often within 3-7 years). 6 Early evidence [7][8][9][10] showed that private equity acquisition was associated with increased charges, reduced staffing, use of profitable service lines, a decreased proportion of patients with Medicare, and increased net income.…”

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confidence: 99%

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Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

Kannan,

Bruch,

Song

2023

JAMA

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ImportanceThe effects of private equity acquisitions of US hospitals on the clinical quality of inpatient care and patient outcomes remain largely unknown.ObjectiveTo examine changes in hospital-acquired adverse events and hospitalization outcomes associated with private equity acquisitions of US hospitals.Design, Setting, and ParticipantsData from 100% Medicare Part A claims for 662 095 hospitalizations at 51 private equity–acquired hospitals were compared with data for 4 160 720 hospitalizations at 259 matched control hospitals (not acquired by private equity) for hospital stays between 2009 and 2019. An event study, difference-in-differences design was used to assess hospitalizations from 3 years before to 3 years after private equity acquisition using a linear model that was adjusted for patient and hospital attributes.Main Outcomes and MeasuresHospital-acquired adverse events (synonymous with hospital-acquired conditions; the individual conditions were defined by the US Centers for Medicare &amp; Medicaid Services as falls, infections, and other adverse events), patient mix, and hospitalization outcomes (including mortality, discharge disposition, length of stay, and readmissions).ResultsHospital-acquired adverse events (or conditions) were observed within 10 091 hospitalizations. After private equity acquisition, Medicare beneficiaries admitted to private equity hospitals experienced a 25.4% increase in hospital-acquired conditions compared with those treated at control hospitals (4.6 [95% CI, 2.0-7.2] additional hospital-acquired conditions per 10 000 hospitalizations, P = .004). This increase in hospital-acquired conditions was driven by a 27.3% increase in falls (P = .02) and a 37.7% increase in central line–associated bloodstream infections (P = .04) at private equity hospitals, despite placing 16.2% fewer central lines. Surgical site infections doubled from 10.8 to 21.6 per 10 000 hospitalizations at private equity hospitals despite an 8.1% reduction in surgical volume; meanwhile, such infections decreased at control hospitals, though statistical precision of the between-group comparison was limited by the smaller sample size of surgical hospitalizations. Compared with Medicare beneficiaries treated at control hospitals, those treated at private equity hospitals were modestly younger, less likely to be dually eligible for Medicare and Medicaid, and more often transferred to other acute care hospitals after shorter lengths of stay. In-hospital mortality (n = 162 652 in the population or 3.4% on average) decreased slightly at private equity hospitals compared with the control hospitals; there was no differential change in mortality by 30 days after hospital discharge.Conclusions and RelevancePrivate equity acquisition was associated with increased hospital-acquired adverse events, including falls and central line–associated bloodstream infections, along with a larger but less statistically precise increase in surgical site infections. Shifts in patient mix toward younger and fewer dually eligible beneficiaries admitted and increased transfers to other hospitals may explain the small decrease in in-hospital mortality at private equity hospitals relative to the control hospitals, which was no longer evident 30 days after discharge. These findings heighten concerns about the implications of private equity on health care delivery.

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Section: Discussionmentioning

confidence: 99%

Section: Hospital-acquired Conditionsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

Kannan,

Bruch,

Song

2023

JAMA

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Financial efficiency of healthcare companies in an emerging market

Cinaroglu,

Pirgaip

2024

Manage Decis Econ

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Understanding the financial dynamics of healthcare companies is essential for reducing costs while improving access to care and patient outcomes. This study aims to explore the financial efficiency of healthcare companies operating in an emerging stock market. We use conventional and fuzzy data envelopment analysis. We consider liquidity and leverage ratios as input criteria and profitability ratios as output criteria, each taken from Borsa Istanbul for the year 2022. The results indicate that financially inefficient healthcare companies can increase their efficiency by effectively managing debt and working capital, restructuring their asset base, and focusing on equity management.

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Value creation in private equity portfolio companies: a structured review of evidence and proposed framework

Krysta

Kanbach

2022

Venture Capital

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Financial Impacts And Operational Implications Of Private Equity Acquisition Of US Hospitals

Cited by 7 publications

References 30 publications

Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition

Financial efficiency of healthcare companies in an emerging market

Value creation in private equity portfolio companies: a structured review of evidence and proposed framework

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