Private equity-owned hospitals

Over the last decade, more and more hospitals have been purchased by private equity firms. As of January this year, private equity firms owned 30 percent of all hospitals. Texas has the most; New Mexico has the highest proportion. Nearly a quarter of private equity-owned facilities are psychiatric hospitals.

A private equity firm raises some capital from investors and borrows the rest. Thus, the acquired hospital must generate revenue to pay down that debt. To do this, managers decrease staffing (both overall and specifically for nurses), shift their focus from outpatient care to more lucrative inpatient care services, and adopt profitable, technology-intensive services such as cardiac catheterization, advanced imaging, and robotic surgery. In addition, private equity firms often sell the real estate portion, and, after several years, attempt to re-sell the hospital for a profit.

 So—what’s the impact on the patient? A group of scientists conducted a study to “examine changes in hospital-acquired adverse events and hospitalization outcomes associated with private equity acquisitions of US hospitals.” In other words, they looked at bad things that happened to people after their hospitals were acquired by private equity firms, comparing the private equity hospital to non-private equity hospitals. The results were reported in the Journal of the American Medical Association. The researchers found that rates of hospital-acquired complications for patients increased by 25 percent at hospitals after they were purchased by private equity firms. The increase was driven by a 27 percent increase in falls, which tend to happen on the general floors of the hospital; a 38 percent increase in central line infections, which are associated with ICU care; and a doubling of the rates of surgical site infections.

I tried to include a link that shows a list of private-equity-acquired hospitals, but it got complicated. You can find a listing by searching on PESP Private Equity Hospital Tracker. Ours is not on the list--yet.

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