Patient Experience Worsens When Private Equity Firms Acquire US Hospitals

After private equity firms acquire hospitals, the patient care experience starts to suffer, according to US survey data.

The proportions of patients who gave a hospital a top rating or said they would definitely recommend it were significantly lower for those treated at centers that had been newly acquired by private equity firms versus those that had not, lead author Anjali Bhatla, MD (Beth Israel Deaconess Medical Center, Boston, MA), and colleagues report in a study published online Thursday in JAMA.

In particular, the responsiveness of staff declined after such transactions, with the situation growing increasingly worse over time.

By year 3 after the purchases by private equity firms, the difference in patient care experience favoring control hospitals was around five percentage points, “which is considered to be a large change,” senior author Rishi Wadhera, MD (Richard A. and Susan F. Smith Center for Outcomes Research in Cardiology at Beth Israel Deaconess Medical Center and Harvard Medical School), told TCTMD. “And I think for context, it’s quite striking that after private equity took over a hospital, global measures of patient care experience worsened more than they did nationally during the COVID-19 pandemic.”

This has broader implications beyond how patients perceive the care they receive at these facilities, Wadhera indicated, pointing to a “a large body of literature that has demonstrated that poor patient experiences with health systems are associated with slower recovery from illness, whether that be cardiovascular conditions or noncardiovascular conditions, nonadherence with treatment regimens, and greater healthcare utilization.”

Patients provide the most important perspective on how well a hospital is delivering care, said Wadhera. “They see and experience elements of healthcare that can’t be captured in more traditional ‘hard outcome’ measures,” he explained. “So how patients feel about their overall care experience, their interactions with doctors and nurses, the responsiveness of staff, and the hospital environment provides critical insights on the quality of care being provided by hospitals after private equity acquisition.”

After private equity took over a hospital, global measures of patient care experience worsened more than they did nationally during the COVID-19 pandemic. Rishi Wadhera

Commenting for TCTMD, Samuel Jones IV, MD (Memorial Hospital/Chattanooga Heart Institute, TN), said how private equity acquisitions of hospitals impact patient care does need to be studied closely.

“As physicians and leaders in healthcare, we need to make sure that we are being realistic about what is happening in private equity,” said Jones, past chair of the American College of Cardiology (ACC) health affairs committee and an incoming member of the ACC board of trustees. “We need to have an awareness. We need to keep our eyes open. Because it seems like there’s a growing body of evidence that private equity has one thing in mind, and that’s definitely profits over patients.”

He added: “Perhaps this isn’t going to be all private equity, and perhaps it’s not in all settings. But there have been multiple instances of this that are occurring.”

Not All Measures Decline

Private equity firms have been scooping up healthcare facilities at an accelerating pace over the last decade, raising concerns among policymakers and healthcare leaders that these groups will focus on turning a quick profit, leading to a decline in the quality of patient care and outcomes. Studies that have examined the impact of private equity, however, have yielded mixed results, with some showing improved mortality after acquisition and others—like one published in JAMA in December 2023—demonstrating an uptick in hospital-acquired adverse events.

But there is little information on how these types of business deals affect the patient care experience at the acquired hospitals.

The study included 73 US hospitals that were acquired by private equity firms between 2010 and 2017 as well as 293 matched control hospitals that were not bought by private equity. The investigators evaluated changes in patient experience from 3 years before to 3 years after private equity acquisition using data from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey.

The percentage of patients who rated hospital a 9 or 10 out of 10 remained steady over time at centers acquired by private equity groups (65.0% before and 65.2% after), but there was a slight increase in this proportion in control centers (66.2% to 69.2%). That resulted in a between-group difference of 2.4 percentage points favoring the nonacquired hospitals.

Similarly, the percentage of patients who said they would “definitely recommend” a hospital decreased at centers acquired by private equity (66.9% to 65.5%) and increased slightly at control hospitals (68.2% to 69.3%), resulting in a between-group difference of 2.1 percentage points that again favored hospitals that were not acquired during the study period.

These differences grew over time, however, with the largest gap seen 3 years after acquisition (5.2 percentage points for rating and 4.4 percentage points for recommendation), larger than the change in scores observed during the COVID-19 pandemic (3.6 percentage points).

The researchers also examined seven other HCAHPS items dealing with clinical process, communication, and environmental measures, finding that only patient-reported responsiveness of hospital staff declined after private equity acquisition.

Worrying About the ‘Flip-and-Strip’ Mentality

Asked what these findings indicate about the effect of private equity involvement on patients’ outcomes—and not just their perceived experience—Jones noted that the existing evidence is mixed.

“I think we have to at least be fair and say the jury is out. The majority of studies seem to indicate adverse events and mortality are negatively affected by private equity, though, and so the growing body of data would indicate that’s where we’re going,” he said.

When it comes to cardiology, private practices have become an increasingly attractive target for private equity firms in the last few years, with a recent MedAxiom survey indicating that such groups now own half of cardiology practices.

Over the next 5 years, cardiology practices and ambulatory surgical centers are likely to continue to garner much interest from private equity, Jones predicted. This study focusing on hospital acquisitions “may not directly correlate to that,” he said, adding that if the “flip-and-strip” mindset of private equity firms remains the same in those other settings, “then we would have cause for concern.”

As physicians and leaders in healthcare, we need to make sure that we are being realistic about what is happening in private equity. Samuel Jones IV

Wadhera said this study “builds upon prior evidence and pretty definitively shows that when private equity takes over a hospital, things generally get worse for patients. And so as private equity’s presence in healthcare continues to grow, I think there’s an urgent need for greater transparency, monitoring, and regulatory oversight.”

The next pressing question, he said, is what policymakers are going to do to protect patients. Potential policy solutions include greater transparency of private equity acquisitions, stronger fraud and abuse protections, provision of additional powers that enable the Federal Trade Commission to monitor these types of transactions, and limitations on the percentage that a private equity firm can use to make an acquisition, he said.

It will take “a multipronged policy strategy to ensure that patients are protected and are receiving the best possible care in the context of this rapidly changing healthcare landscape, which is becoming increasingly financialized and corporatized,” Wadhera said.