Private equity investment can be a boon for healthcare providers struggling with thin margins that want to grow. But a new study published in the Journal of the American Medical Association found PE-backed hospitals may have worse quality of inpatient care.
The study examined more than 662,000 hospitalizations at 51 private equity-backed hospitals and paired them with more than 4 million hospitalizations at 259 non-PE-backed hospitals. The study authors used 100% Medicare Part A claims data to analyze outcomes for patients.
The study authors found 25.4% more hospital-acquired conditions, primarily falls and central line-associated bloodstream infections, among the PE-backed hospitals. The Medicare beneficiaries at the PE-backed hospitals were also a bit younger and a lower-risk population than the non-PE-backed hospitals, according to the study.
"These findings heightened concerns about the implications of private equity on health care delivery," the study authors concluded.
Private equity firms are also pursuing ASCs and specialty physician groups to invest and expand the businesses. Orthopedics, gastroenterology and cardiology are especially attractive targets for PE investment. Private equity deals for orthopedics-focused ASCs have increased in the last five years, according to a report from VMG Health.
ASC leaders and physicians are divided on private equity's potential impact after investment. Some ASCs and physician groups have found the arrangement beneficial because they receive the financial boost to avoid selling to the hospital and maintain control of day to day operations. Others are more skeptical, concerned private equity firms will prioritize return on investment over patient care.
Stephen M. Topper, MD, orthopedic surgeon and partner and co-founder of Aspire Physician Solutions, put it this way: "The concern is that private equity investors do not put patients first, prioritizing profit over patient care. Physician owners understand that when you put patient safety and quality care first, success follows. I personally agree with that statement having been a clinical practitioner for 30 years. Private equity is an incredibly broad term and under that umbrella there are a lot of different models. That is why it is incumbent on physician owners to ensure alignment of interests when considering a private equity partnership."