Some differences between private equity-owned hospitals and non-acquired hospitals are due to geographic and socioeconomic reasons, although it is unknown if these are related to the acquisition in the first place.
On average, private equity-owned hospitals are more likely to be in low-income, rural areas, according to a study published in the Annals of Internal Medicine Monday afternoon.
The analysis, which examined hospital data from 2018, found that most private-equity-owned hospitals were medium-sized and shared similar characteristics:
- Located in the South, in zip codes with lower median household incomes.
- Had higher rurality scores compared to non-acquired hospitals.
- Had "slightly lower" patient experience scores and fewer patients discharged per year.
These hospitals also had fewer full-time equivalent employees per occupied bed compared to non-acquired hospitals, but did not differ with regards to "net income per patient discharged, total inpatient charge per inpatient day, total charge-to-cost ratio, or Medicare and Medicaid shares of patients discharged."
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The study indicated that some differences between private equity-owned hospitals and non-acquired hospitals are due to geographic and socioeconomic reasons, although it is unknown if these are related to the acquisition in the first place.
"A separate question is whether private equity–owned hospitals differ from other hospitals in ways that negatively affect patient care," Joseph Bruch, BA, a PhD student at Harvard T.H. Chan School of Public Health, wrote. "Fewer full-time– equivalent employees per occupied bed and lower average patient experience scores among private equity–owned hospitals raise concern. These measures, however, do not fully capture quality of care, and the potential effect of private equity on quality and other outcomes was outside the scope of this cross-sectional analysis. Therefore, additional research is necessary to identify and characterize the mechanisms underlying these differences."
Related: Private Equity Continues to Buy More Physician Practices
The Annals of Internal Medicine study is the latest research focusing on the investments made by private equity firms in healthcare, specifically hospitals.
Related: Private Equity Ophthalmology Acquisitions Doubled From 2017 to 2018
In late August, a JAMA study found hospitals acquired by private equity firms experienced increases in net income as well as improvement with quality metrics.
Compared to non-acquired hospitals, private equity-bought provider organizations saw a mean increase in annual net income of more than $2.3 million, an increase of $407 in total charge per inpatient day, and an increase of 0.31 in total charge to cost ratio.
Related: JAMA: PE-bought Hospitals Experienced Net Income Increases, Quality Improvement
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.
KEY TAKEAWAYS
Private equity-owned hospitals had fewer full-time equivalent employees per occupied bed compared to non-acquired hospitals.
"A separate question is whether private equity–owned hospitals differ from other hospitals in ways that negatively affect patient care," Joseph Bruch, BA, a PhD student at Harvard T.H. Chan School of Public Health, wrote.