Does Private Equity Ownership Improve or Undermine Healthcare Quality and Costs?

🔍 Key Finding

Private equity ownership of healthcare operators is increasing rapidly and is often associated with increased costs to patients or payers and mixed to harmful impacts on quality. This warrants increased attention and possibly increased regulation.

🔬 Methodology Overview

• Design: Systematic review
• Data Sources: PubMed, Web of Science, Embase, Scopus, and SSRN
• Eligibility Criteria: Empirical research studies evaluating private equity-owned healthcare operators, published in English between 2000-2023, addressing outcomes like health outcomes, costs, and quality, or the prevalence of PE ownership.
• Data Synthesis: Narrative synthesis of findings, classifying impacts of PE ownership as beneficial, harmful, mixed, or neutral.
• Risk of Bias Assessment: ROBINS-I tool for quantitative studies and Joanna Briggs Institute Critical Appraisal Checklist for Qualitative Research for qualitative studies.
• Sensitivity Analysis: Included studies with moderate risk of bias.
• Sub-Analysis: Focused on nursing homes as the most common setting.

📊 Results

• Increased PE ownership: PE ownership of healthcare operators has rapidly increased across almost all settings studied, with deal counts often rising yearly over the study periods.
• Higher costs for patients/payers: PE ownership was most consistently associated with increased costs to patients or payers (9 / 12 studies showed this harmful impact). Mechanisms included increased charges, higher negotiated rates with payers, and spillover effects on local market prices.
• Mixed impact on quality: PE ownership had mixed to harmful impacts on quality of care. While some studies showed improvements in specific quality measures (e.g., acute myocardial infarction and pneumonia quality scores in hospitals), more studies found harmful impacts (e.g., lower patient experience scores, reduced staffing, increased deficiencies).
• Reduced nurse staffing: Several studies suggested PE ownership was associated with reduced nursing levels or a shift towards lower nursing skill mix, potentially as a cost-saving measure. This included lower RN staffing hours per patient day in nursing homes and lower total staff FTEs per occupied bed in hospitals.
• Mixed results for other outcomes: Impacts on health outcomes and costs to operators were mixed, with fewer studies available for analysis. Two studies showed improved health outcomes (reduced mortality in PE-owned hospitals and reduced COVID-19 outbreaks in PE-owned nursing homes), while three showed worse health outcomes. Three studies found reduced costs to operators in hospitals, while two found increased costs in nursing homes.
• Geographic focus on the US: The majority of studies (47 / 55) focused on the US, limiting the generalizability of findings to other countries with different healthcare systems and regulations.
• Risk of bias: Many studies had moderate to serious risk of bias, primarily due to confounding, which could influence the observed associations between PE ownership and outcomes.

💡 Clinical Impact

Private equity ownership of healthcare operators is increasing and is often associated with increased costs to patients and payers and mixed or harmful impacts on quality of care. Clinicians should be aware of these trends and advocate for policies that prioritize patient safety and affordability over profit maximization in healthcare delivery.

🤔 Limitations

1. Limited generalizability: Most included studies were conducted in the US, so the identified impacts may not apply to other countries with different healthcare systems, payment models, and regulations. Specifically, impacts on costs may be less pronounced in settings with universal healthcare.
2. Limited scope of PE subtypes: The review did not differentiate between different types of PE investment (e.g., minority vs. majority stakes), treating all forms of PE affiliation as the same intervention. This simplification may obscure nuances in how different levels of PE involvement affect healthcare delivery.
3. Omission of key outcomes: The review did not analyze PE’s impact on profitability, debt load, bankruptcy risk, or productivity, which are important factors for healthcare organizations’ financial health and stability. It also did not fully explore the broader impacts on access to care.
4. Simplification of outcome measures: Grouping diverse outcome measures into broader categories (health outcomes, costs, quality) facilitated synthesis but sacrificed the granularity of individual studies.
5. ROBINS-I limitations: The risk of bias tool (ROBINS-I), while generally useful, is not ideal for all quasi-experimental designs used in some of the included studies.
6. Potential for missed studies: Despite a broad search strategy, the interdisciplinary nature of PE research may mean that some relevant studies were missed.
7. Short follow-up periods: Many studies had short follow-up periods, potentially failing to capture the long-term effects of PE ownership on health systems.

✨ What It Means For You

Private equity ownership of healthcare facilities is increasing, and is associated with higher costs for patients and payers, and mixed or negative impacts on quality of care, often through reduced nurse staffing levels. Doctors should be aware of these trends and advocate for policies that prioritize patient well-being and access to high-quality, affordable care, potentially including increased regulation and transparency of private equity involvement in healthcare. Additionally, doctors practicing in settings targeted for private equity acquisition (e.g., fragmented markets) should be aware of the potential implications for their practice and patients if their facility is acquired.

Reference

Borsa AB, Bejarano G, Ellen M, Bruch JD. Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review. BMJ. 2023;382:e075244. https://doi.org/10.1136/bmj-2023-075244