Private Equity Firms Worsen Hospital Patient Outcomes: Study

Research indicates private equity takeovers often lead to sharp cuts in hospital staffing, pay and resources across emergency and intensive care departments.

A new study warns that patient deaths rose by 13% after hospitals were taken over by private equity firms, as cost-cutting measures often reduce investment in staff and impact the quality of care provided.

Published in the Annals of Internal Medicine late last month, the findings indicate that private equity-owned hospitals are more likely to cut salaries for emergency room and intensive care unit workers. In contrast, hospitals without private equity ownership increased pay in these departments, which is known to strengthen staffing and improve patient outcomes.

The results build on a growing body of research warning that private equity ownership of medical facilities can undermine patient safety. Earlier studies by Harvard University and the University of California, San Francisco, found that hospitals acquired by private equity firms often deliver lower-quality care, as asset stripping and staff reductions place patients at greater risk.

Similarly, Brown University researchers reported that physicians affiliated with private equity-backed groups tend to charge higher prices without improving the quality of care. Other studies have noted that for-profit and private equity-owned hospitals consistently invest less in nursing services and direct patient care.

Concerns have become serious enough that the U.S. Senate Budget Committee has identified private equity ownership in healthcare as a growing threat to patient safety and the stability of the U.S. healthcare system.

In the new study, researchers from the University of Pittsburgh, University of Chicago and Harvard Medical School examined hospital cost report data from 2007 to 2019, as well as data from Medicare Part A and B claims from 2009 to 2019.

Led by Dr. Sneha Kannan, the team compared that information to data for hospitals acquired by private equity firms between 2010 and 2017.

Overall, more than 1 million emergency room visits and 121,000 intensive care unit (ICU) hospitalizations across 49 private equity hospitals were compared with 6.1 million ER visits and 760,000 ICU hospitalizations across 293 control hospitals.

According to the findings, there were seven more deaths per 10,000 visits among patients cared for in ERs at private equity-owned hospitals when compared to hospitals not run for-profit, representing a 13% overall increase in deaths. Comparatively, the death rate at the control hospitals dropped during the same time.

The researchers also found that patients at private equity ERs had a 4% increase in transfers to other acute care hospitals after being acquired. The rate of transfer was nearly 11% among patients in ICUs at private equity hospitals after being acquired.

Private equity hospitals also reduced hospital stays for ICU patients by 5% compared to control hospitals. Health experts warn that shorter stays for more critically ill patients can pose a risk to their recovery.

After hospitals were acquired by private equity firms, salaries for ER staff were reduced by 18% and expenses for the ICU by 16%, the data indicates. At the same time, staffing numbers for all hospital employees were reduced by nearly 12% and by nearly 19% for all salary expenses.

However, while private equity hospitals reduced the average number of full-time employees, control hospitals not run for-profit increased theirs.

“This decreased capacity to deliver care may explain the increased patient transfers to other hospitals, shortened ICU lengths of stay, and increased emergency department mortality.”

— Dr. Sneha Kannan, Hospital Staffing and Patient Outcomes After Private Equity Acquisition

The data indicates that after hospitals were acquired by private equity firms, their death rates increased, transfer rates increased, and they reduced ICU stays, the researchers conclude, warning that the decrease in salaries, expenses and overall staffing led to reduced patient care, which led to an increase in the number of deaths.