Researchers at Harvard Medical School and the University of Chicago are recommending more transparency concerning the effects that private equity ownership has on hospital and physician practice operations, and the incentives of these firms, after finding increases in falls, new infections, and other harms experienced by patients in these facilities.

Using claims for all fee-for-service Medicare hospitalizations from 2009 to 2019, the authors compared over 600,000 hospitalizations at 51 PE-owned hospitals and more than four million hospitalizations at 259 non-PE-owned ones. Patients in private equity-owned facilities experienced 27% more falls, developed 25% more hospital-acquired infections, and contracted 38% more bloodstream infections from central lines, despite a 16% decrease in central lines following acquisitions.

A small decrease in deaths was chalked up to these facilities caring for younger and less disadvantaged patients and more frequent transfers out of PE-owned hospitals. Longer follow-ups revealed this decrease tapered off within a month after discharge.

While evidence of the effects that private equity firms have on care quality is scarce and poorly understood, the authors say their findings indicate that the profit-driven incentives of PE firms may eclipse care quality and health outcomes as a priority. As a result, they say that more transparency is required to show how hospital operations change under private equity firms and in the long-term, affect care quality.

“Patients and providers, investors and taxpayers, employers and insurers, all have a stake in this. Understanding what the corporatization of healthcare delivery means is a goal shared by many across society,” said Zirui Song, associate professor of health care policy and medicine in the Blavatnik Institute and director of research in the Center for Primary Care at HMS, in a statement.

Prior studies have linked PE ownership to increased pricing and reductions in staff, and less profitable services as a means to increase financial performance and pay off debts incurred as part of acquisitions. The authors say this evidence has raised concerns about growing PE investments in the healthcare space, but acknowledge that most PE firm buyouts are of successful operations that are expected to generate the revenue needed to pay off debts.

Evidence has also shown, at least in the short term, that these businesses improve hospital financial performance. But it is this focus on profits and paying off debts that worries the authors, who say it may create perverse incentives favoring profit over patients. They also point out that current requirements dictate that only deals above 111.4 million be reported. While this may help track PE hospital acquisitions, those of less expensive, independent physician practices are more likely to go unreported, preventing assessments of financial performance following acquisitions.

“Hospital success is measured not only in dollars or the number of patients who pass through the doors, but also in lives saved, complication rates, patient satisfaction, and a number of other quality and safety metrics. We need to make sure we fully understand the costs and benefits of this prominent new force in healthcare,” said HMS research fellow Sneha Kannan, a physician in the division of pulmonary and critical care at Massachusetts General Hospital.

The findings were published in JAMA.

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