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Hospital Complications Rise After Private Equity Buyout

— Medicare data point to additional reason for concern

Ƶ MedicalToday
A photo of businessmen sitting around a conference table looking at charts and graphs on a monitor.

After private equity acquisition, medical centers had an increase in hospital-acquired adverse events, despite a shift to a lower-risk case mix, a study of Medicare data showed.

Admission at a private equity hospital was associated with a 25.4% greater risk of hospital-acquired conditions compared with treatment at a non-private equity hospital, an absolute difference of 4.6 such conditions per 10,000 hospitalizations (P=0.004), Zirui Song, MD, PhD, of Harvard Medical School in Boston, and colleagues reported in .

Driving the difference were more falls and central line-associated bloodstream infections along with a doubling in surgical site infections, despite fewer central lines placed and a younger and less dually (Medicare/Medicaid) eligible population compared with the controls.

The findings together "suggested poorer quality of inpatient care," wrote the researchers, and "heighten concerns about the implications of private equity on healthcare delivery."

Soaring rates of private equity buyouts of both physician practices and hospitals have drawn federal scrutiny. The Federal Trade Commission recently sued one medical group and its private equity backers, alleging anticompetitive practices that drove up healthcare costs.

The study from Song and colleagues utilized data from 100% Medicare Part A claims for hospital stays between 2009 and 2019 to compare 662,095 hospitalizations at 51 private equity-acquired hospitals against 4.2 million hospitalizations at 259 hospitals that were not acquired by private equity, matched by year, ownership types, teaching status, and U.S. Census region with "nearest neighbor matching" for total number of beds. The difference-in-differences were analyzed for events from 3 years before to 3 years after private equity acquisition.

Hospital-acquired conditions, considered preventable based on Centers for Medicare & Medicaid Services guidelines, included: foreign object retained after a surgery, air embolism, blood incompatibility, stage 3 or 4 pressure ulcers, falls and trauma, catheter-associated urinary tract infections, central line-associated infection, surgical site infections from coronary artery bypass grafting or bariatric surgery or certain orthopedic procedures, diabetic ketoacidosis or hypoglycemic coma, and deep vein thrombosis or pulmonary embolism after total knee and hip replacement procedures.

Results showed that private equity acquisition was associated with 27.3% more falls, an additional 1.9 falls per 10,000 hospitalizations (P=0.02); and 37.7% more central line-associated infections, an extra 1.5 per 10,000 hospitalizations (P=0.04). That occurred against a backdrop of placing 16.2% fewer central lines than non-private equity hospitals (37.1 per 10,000 hospitalizations).

Notably, surgical site infections doubled after acquisition (10.8 to 21.6 per 10,000 hospitalizations), whereas they dropped at non-acquired hospitals over the same span (17.5 to 12.6 per 10,000 hospitalizations). Adjusted for covariates, the relative difference with private equity hospitals was a 147.8% increase, albeit not statistically significant due to a smaller sample size. This was "particularly alarming because the number of surgical site infections increased even as private equity hospitals performed 8% fewer surgical procedures after acquisition," the researchers wrote.

At the same time, case mix shifted at the private equity hospitals toward a younger population (-0.1 years, 95% CI -0.2 to -0.1), particularly among sepsis diagnosis-related groups, and a lower proportion who were dually eligible for Medicare and Medicaid (by 1.2%).

"To the extent these observable characteristics reflect private equity hospitals admitting modestly lower-risk patients (both clinically and socioeconomically), their simultaneous increase in coded disease burden (van Walraven-Elixhauser comorbidity score) compared with the control hospitals may reflect increased coding intensity at private equity hospitals," the researchers noted.

In part because of that shift, according to the researchers, in-hospital mortality decreased slightly at private equity hospitals (3.5% preacquisition vs 3.2% postacquisition), although this was no longer evident at 30 days after discharge.

"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," the group wrote. "These adverse events themselves can raise the risk of mortality, which highlights the clinical importance of this evidence."

Limitations of the study included a potential lack of generalizability to all private equity acquisitions and to all other types of insurance. "Although the implementation of hospital-acquired conditions in 2009 and our Medicare data availability postdated the in 2006, thus excluding those hospitals from this study, our sample likely better resembles the typical private equity hospital," the researchers noted.

Also, "given private equity acquisitions are not random and private equity firms may acquire hospitals for unobserved reasons, our findings remain susceptible to unmeasured confounding and do not imply causation," the team added.

Disclosures

The study was supported by grants from the National Heart, Lung, and Blood Institute; the National Institute on Aging; and Arnold Ventures.

Song reported receiving personal fees from the Research Triangle Institute, Google Ventures, and VBID Health.

Primary Source

JAMA

Kannan S, et al "Changes in hospital adverse events and patient outcomes associated with private equity acquisition" JAMA 2023; DOI: 10.1001/jama.2023.23147.