Serious medical errors increased after private equity firms bought hospitals

The number of serious medical complications in hospitals has increased after they were bought by private equity investment firms, according to a major study into the effects of such acquisitions on patient care in recent years.

The study, published Tuesday in JAMA, found that in the three years after a private equity fund bought a hospital, adverse events, including surgical infections and pressure sores, among Medicare patients rose 25 percent compared to comparable hospitals not owned by such investors. had been purchased. . The researchers reported a nearly 38 percent increase in central line infections, a dangerous type of infection that medical authorities say should never occur, and a 27 percent increase in falls during their hospital stay.

“We weren’t surprised that there was a signal,” said Dr. Sneha Kannan, a health care researcher and physician in the pulmonary and critical care department at Massachusetts General Hospital, who was the paper’s lead author. “I will say we were surprised at how strong it was.”

Although the researchers noted a significant increase in medical errors, they also saw a slight decrease (of almost 5 percent) in the number of patients who died during their hospital stay. The researchers believe other changes, such as a shift toward healthier patients admitted to hospitals, may explain this decline. And 30 days after patients were discharged, there was no significant difference in death rates between hospitals.

Other researchers who reviewed the study said that while it did not provide a complete picture of the effects of private equity, it did raise important questions about the quality of care in hospitals acquired by private equity owners.

“This is a big deal because this is the first piece of data that I think indicates quite strongly that there is a quality problem when private equity takes over,” said Dr. Ashish Jha, dean of the Brown University School of Public Health. has also extensively studied hospital safety.

Over the past twenty years, private equity firms have become major players in healthcare. They have bought not only hospitals, but also a growing number of nursing homes, doctor’s offices and home health care companies. The companies pool money from institutional investors and private individuals to form investment funds, often buying highly indebted hospitals and other entities with a view to reselling them within a few years. A separate recent study suggested that the companies were consolidating physician groups in certain local markets, potentially leading to higher prices.

So far, these companies own a small share of hospitals in the United States, although the numbers are difficult to measure because the transactions are not always public.

Various media reports show that some of the hospitals taken over have been forced to do this closed due to financial problemsand some have perished regulatory oversight for quality problems. But such examples are not necessarily typical.

“The private equity industry plays a vital role in providing local hospitals with the capital they need to improve patient care, expand access and drive innovation,” said Drew Maloney, CEO of American Investment Council, an industry trade group. “This research does not reflect the full track record of private equity in strengthening health care across the country.”

The sector has recently come under scrutiny. This month the Senate Budget Committee began a two-part investigation in private equity ownership of hospitals. And bills from several Democrats in Congress have pushed for more public reporting on private equity deals in health care, as well as broader reforms in the ways companies can acquire companies and make profits.

Several studies have examined the financial effects of private equity firms on hospitals. The new paper, which examines 51 hospitals between 2009 and 2019, provides new evidence that these changes could result in more dangerous conditions for patients. The researchers, including Dr. Zirui Song of Harvard and Joseph Dov Bruch of the University of Chicago, received funding from Arnold Ventures, a group that supports a wide range of healthcare research and research. has been critical of the private equity sector.

Last research found that patients were less likely to die after visiting a private equity-backed hospital. But the researchers said they wanted to focus their study on specific measures such as medical errors that more directly reflect care in a hospital, rather than patient deaths, which are more likely to be influenced by the health status of the patients entering the hospital .

The researchers examined a series of errors that Medicare detects and encourages hospitals to minimize. Hospitals with high levels of some of these problems – such as central line infections – must pay financial penalties to the government. Although not all errors occurred frequently enough to be measured accurately, and complications were rare overall, all eight individual measures studied in the paper deteriorated in the hospitals purchased by private equity funds.

The incidence of these complications has generally been declining for about fifteen years as hospitals have made efforts to reduce complications and as best practices for avoiding them have become more widespread.

“These are avoidable side effects that everyone believes should not occur in hospitals,” says Dr. David Blumenthal, the former president of the Commonwealth Fund, a nonprofit health care research group, who reviewed the study.

Some private equity owners may be too eager to reduce costs, leading to a decline in the quality of care, he said. “It’s about the style of investing,” he said. “It’s about the aggressiveness and the short-term profits and returns on investments that are being sought.” In the cases where they do not follow this strategy, private equity can be positive, added Dr. Blumenthal added: “It involves capital. It brings innovation.”

The researchers said the most likely explanation for the increased errors was fewer hospital staff, an effect that has been measured in other private equity studies. “A post-acquisition workforce reduction could explain all these findings,” said Dr. Song.

But this article did not directly measure staffing levels in the hospitals studied.

Dr. Song did that argued for more government supervision of healthcare private equity companies. But several scientists who have studied the companies said that while the new paper raises serious concerns, it still leaves some important questions unanswered for policymakers.

“This should make us lean forward and pay attention to what’s happening,” said Zack Cooper, an economics professor at Yale who has studied the sector. “It should not lead to us introducing a wholesale policy.”

Vivian Ho, professor of economics at Rice, co-authored a paper showing workforce reductions after the companies bought hospitals, including minor cuts to nursing. Professor Ho noted that it is difficult to be sure whether the reductions were the result of the change in leadership, or specifically ownership of a private equity firm, but she said the results were alarming enough that she would like to see more evidence .

“I’m willing to believe this is because of the staffing issues,” she said. “Just combine that with the anecdotal stories of what’s happening in some of these hospitals, and it’s a consistent story.”