Private equity ownership of hospitals is dramatically changing patient care experiences. From Scope, the blog of the Yale Scientific Magazine.
Over the past decade, private equity firms have increasingly acquired hospitals from public and nonprofit organizations for monetary gain. In such scenarios, what happens to the patients when the care they receive is secondary to profit? To address this topic, a recent study conducted by Anjali Bhatla and Rishi Wadhera, the first and corresponding authors of the study, respectively, looked into how PE acquisitions affected patient care experiences. The findings show a worrying pattern: patient-reported experiences gradually worsen under private equity ownership.
In previous studies, researchers and policymakers investigated how PE-acquired hospitals benefit investors vs patients based on financial and operational results. In contrast, this study focused on a crucial, but frequently disregarded factor: the patient experience. “Given the rapidly increasing growth of private equity in healthcare facilities, and the recognition that patient care experience is associated with a number of healthcare outcomes, such as readmission, mortality, and safety, we felt it was critically important to understand how ownership changes impact this dimension of care,” Bhatla said.
To ascertain if PE ownership is associated with shifts in patient happiness and hospital recommendations, the researchers used survey data from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), a standardized national survey that collects feedback from recently discharged patients about their hospital experiences. This study was based on two main HCAHPS’ indicators: patients’ overall hospital ratings and their propensity to refer the facility to others.
In hospitals that were acquired by PE firms, both measures decreased. Specifically, on a scale of one to ten, 65.2% of patients gave hospitals a score of nine or ten before acquisition; after acquisition, this percentage slightly decreased to 65.0%. However, non-PE-owned hospitals experienced a more substantial increase in high ratings during the same time period, from 66.2% to 69.2%. Similarly, the percentage of patients who would recommend PE-acquired hospitals decreased from 66.9% before acquisition to 65.5% after acquisition, whereas non-PE-owned hospitals experienced an increase from 68.2% to 69.3%. This growing disparity underscores a concerning trend in patient satisfaction and willingness to recommend PE-owned hospitals.
While overall satisfaction scores provide a broad perspective on patient sentiment, the study also examined seven additional HCAHPS measures focused on communication, clinical procedures, and the hospital environment. Among these, hospital staff responsiveness—which directly affects patient comfort and timely care—experienced the most significant decline in PE-owned hospitals, with a decrease of 1.3 percentage points post-acquisition. In contrast, non-PE-acquired hospitals saw an increase of 1.0 percentage points in staff responsiveness during the same period. Other metrics, such as nurse and physician communication, remained largely unchanged in both PE-acquired and non-PE-acquired hospitals. Additionally, measures like cleanliness and discharge information showed minimal variation across both hospital types.
Through these findings, Bhatla and Wadhera revealed that hospitals undergo structural changes post-acquisition. An example of this, Bhatla and Wadhera believe, could be due to reduced staffing, which may result from cost-cutting initiatives, cause longer response times, and subsequently aggravate patients. This supports other studies that found PE corporations frequently lower labor costs to increase profit margins at the potential detriment of patient care.
These patterns of cost-cutting and reduced services in PE-owned hospitals do not just impact patient satisfaction—they raise significant policy concerns at the national level.
A bipartisan Senate Budget Committee investigation, initiated in December 2023, delved into the broader ramifications of private equity (PE) ownership in healthcare. The investigation, led by Chairman Sheldon Whitehouse (D-R.I.) and Ranking Member Chuck Grassley (R-Iowa), highlighted trends such as service terminations, financial mismanagement, and, in certain situations, actual patient injury. The Senate report describes how PE firms often extract substantial profits at the expense of the hospitals they own. For example, one hospital system was forced to close several locations due to debt accumulation following a PE acquisition, depriving patients of necessary medical care. These structural problems highlight the moral conundrum at the foundation of private equity in healthcare: how do patients benefit when financial interests collide with healthcare services?
This research, along with ongoing bipartisan investigations, suggests that the conversation around PE ownership of hospitals is far from over. Therefore, as discussions regarding PE in healthcare continue, it’s vital to understand that when hospitals become commodities, patient care becomes collateral damage.