Sarasota, FL (WorkersCompensation.com) – Between cost increases and revenue cycle difficulties, private equity financing has been a more common tool that healthcare is turning to navigate the challenges. While private equity options may keep certain organizations afloat, several studies as well as the federal government are taking a closer look at the healthcare trend that has kept some organizations from filing bankruptcy.
Last month, the Biden administration announced several steps they are taking in their plans to further investigate private equity ownership in healthcare. The initiatives include a public inquiry in collaboration with the Department of Justice (DOJ), the Federal Trade Commission (FTC), and the Department of Health and Human Services (HHS) to determine how mergers in healthcare are effecting patients directly.
The administration will work to identify anticompetitive mergers that currently elude antitrust review due to size and structure requirements. According to the announcement, serial mergers using a “roll up” strategy of several smaller buyouts are actually consolidations of the market and may violate antitrust laws. However, due to the size of the acquisitions, the smaller mergers are below the requirement for reporting, making it harder for enforcement agencies to identify anticompetitive transactions, and trend issues.
Another step includes public transparency of ownership. Currently, providers and organizations are required to disclose ownership to CMS. Under the new initiative, ownership data would be publically available for tracking of trends, such as identifying common owners of facilities with poor performance or changes in cost.
Multiple studies have suggested that private equity and mergers are associated with drastic increases in costs. However, a recent study by researchers at Massachusetts General Hospital suggests a correlation between mergers and an increase in adverse events.
Researchers reviewed hospitalization data for 51 hospitals that were private equity acquisitions against hospitals that were not privately owned. Data reviewed included hospital stays from 2009 to 2019.
Up to the three years after acquisition, the analysis indicated a 27 percent increase in falls, and a 38 percent increase in central line-associated bloodstream infections despite placing 16.2 percent less central lines. Additionally, surgical site infections doubled despite an 8.1 percent reduction in surgical volume. The researchers noted that during the same time period, infections had decreased at the control hospitals.
The researchers noted a difference in demographic as well. Patients treated at the private equity facilities were younger, and less likely to be dually eligible for Medicare and Medicaid, and were more often transferred to other acute care hospitals after shorter lengths of stay.
For differences in mortality, deaths decreased slightly for the private equity facilities. However, there was no difference at 30 days post discharge.
Between the new efforts of the Biden administration to take a deeper dive into healthcare mergers, and studies indicating increases in costs and adverse patient events, it will be interesting to see how these findings will ultimately change the healthcare landscape.