HMN 2025: How Patient outcomes worsen in hospitals acquired by private equity firms

A difference-in-differences analysis examined hospital staffing and patient outcomes after private equity acquisition, focusing on emergency departments (EDs) and intensive care units (ICUs).

This study found that private equity hospitals reduced both salary expenditures and total staffing compared to nonprivate equity hospitals. Likely as a result, private equity hospitals experienced an increase in patient transfers to other hospitals, shortened ICU stays, and increased ED mortality.

These changes in patient outcomes could reflect a decrease in capacity to deliver care due to the staffing cuts. The analysis is published in Annals of Internal Medicine.

Researchers from the University of Pittsburgh, University of Chicago, and Harvard Medical School analyzed hospital cost report data collated by the RAND Corporation between 2007 and 2019 and 100% Medicare Fee-for-Service Part A and Part B claims between 2009 and 2019 from hospitals acquired by private equity firms between 2010 and 2017 and matched control hospitals not acquired by private equity.

Primary staffing-related outcomes were salary expenditures per bed day for both the ED and ICU. Secondary outcomes included total hospital salary expenditures and full-time equivalent employees. Primary clinical outcomes were ED and ICU mortality, ED and ICU transfers to other acute care hospitals, and ICU length of stay. Compared to matched non-acquired control hospitals, private equity hospitals reduced their ED and ICU salary expenditures by 18.2% and 15.9% of preacquisition levels.

Private equity hospitals reduced their average full-time employees whereas control hospitals increased their average full-time employees. In-hospital mortality among those treated in the ED increased by 13.4% at private equity hospitals, while decreasing at control hospitals. At private equity hospitals, ED and ICU transfers to acute care hospitals increased by 4.2% and 10.2% from baseline, respectively.

ICU length of stay decreased by 4.7%. These findings suggest reductions in salary expenditures could represent a key mechanism by which cost cutting after private equity acquisition contributes to changes in clinical care and patient outcomes.

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