What happens to hospital income, use, and quality after a hospital is acquired by a private equity firm?

We and others have speculated about this - now, we add data to the discussion.

A short thread on our new paper in @JAMAInternalMed led by @Joe_Bruch with Zirui Song. 1/x https://twitter.com/JAMAInternalMed/status/1297926672210067456">https://twitter.com/JAMAInter...

2/x. First, why does this matter? Private equity deals in healthcare totaled $80 billion in 2019, from $23B in 2015. That& #39;s a ~250% increase over 4 years. The most active sector for investment? Healthcare providers, including hospitals, MD practices, etc. https://www.bain.com/insights/year-in-review-global-healthcare-private-equity-and-corporate-ma-report-2020/">https://www.bain.com/insights/...

3/x. In @JAMA_current last year, we discussed the potential risks (prioritizing profits over patients, consolidation, less clinician autonomy) but also the potential benefits (efficiency, less waste) of private equity ownership of healthcare provider orgs https://jamanetwork.com/journals/jama/fullarticle/2727259">https://jamanetwork.com/journals/...

4/x. In our paper today, we looked at 200+ PE-acquired hospitals and compared them before vs after acquisition and against similar hospitals not acquired (controls). We looked at 8 hospital income and utilization measures and 3 aggregate hospital quality measures.

5/x. What did we find? Relative to controls, PE-acquired hospitals saw increases in net income, total charge per inpatient day, and charge-to-cost ratios, suggesting they began charging more and/or cutting costs after acquisition, which resulted in increased net income.

6/x. We also found PE hospitals discharged fewer Medicare patients after acquisition but Medicaid and total discharges were similar. So it& #39;s possible PE hospitals began seeing a higher proportion of privately insured patients, leading to higher payment rates -> higher net income.

7/x. What about quality? We could only look at process metrics & found that aggregate quality measures increased slightly for heart attacks and pneumonia (no change for heart failure)

Whether this reflects truly better quality or better compliance & reporting is an open question

8/8 As the influence of private equity in our healthcare system grows, incentives may shift in BIG ways, and policymakers should pay attention.

Check out the paper for more (including subgroup analysis of @HCAhealthcare hospitals) & limitations.
END https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2769549">https://jamanetwork.com/journals/...