Patient Care Experience Declines After Private Equity Hospital Acquisitions

Patient care experience declined following private equity acquisition of US hospitals, according to a study published in JAMA.¹

Private equity acquisition has increased over the past decade in the US, attracting widespread scrutiny due to concerns that private equity firms’ financial incentives could have adverse implications for patient care.² Evidence on quality and outcomes post-acquisition has been inconsistent; some studies have linked private equity acquisitions to lower mortality rates, while others have reported an increase in adverse events.¹

However, little is known about whether patient care experience has changed post-acquisition; poor patient experiences are associated with greater health care use, slower recovery from illness, and nonadherence to treatment regimens. Given these gaps in knowledge, the researchers sought to evaluate whether the acquisition of hospitals by private equity firms is associated with changes in patient-reported experience.

Private equity hospital acquisitions in the US were associated with declines in patient care experience, particularly in overall hospital ratings, willingness to recommend, and staff responsiveness. | Image Credit: Spiroview Inc. - stock.adobe.com

They identified hospitals acquired by private equity firms through mergers and acquisitions data from Irving Levin Associates and Pitchbook, which they manually verified through news releases, hospital websites, and other online sources. Eligible private equity acquisitions occurred between 2008 and 2019; the researchers aimed to avoid overlap with the onset of the COVID-19 pandemic. Data from the American Hospital Association annual survey and CMS Impact Files were used to obtain hospital characteristics.

Additionally, the researchers used the CMS Hospital Compare files to determine patient care experience measure scores for each hospital based on Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey results; HCAHPS is a 29-question survey that asks recently discharged patients about their care experiences during hospitalization. Over 2.5 million surveys are completed annually, with more than 7500 patients completing it daily.

The primary outcomes were 2 global measures of patient care experience from HCAHPS: patients’ overall hospital rating and willingness to recommend the hospital. Respondents rated the hospitals on a scale of 1 to 10, with 10 being the best, and their recommendation options ranged from “definitely no,” to “definitely yes.”

The researchers determined the percentage of patients reporting the top-box response for each measure. For the overall hospital rating, this was considered a response of 9 or 10, and for patients’ willingness to recommend the hospital, it was “definitely yes.”

The secondary outcomes included 7 other HCAHPS measures, which focused on clinical processes (staff responsiveness and discharge information), communication (communication with nurses, doctors, and about medications), and hospital environment (cleanliness and quietness). Survey responses for each of these measures were “never,” “sometimes,” “usually,” or “always.” The only exception was discharge information; the options were “yes” or “no.”

Overall, the researchers used an event study, difference-in-differences design to evaluate changes in outcomes after private equity acquisition of hospitals. For each hospital, they considered the acquisition year as time 0 and evaluated outcomes during the 3 years pre- and post-acquisition.

The researchers analyzed 73 hospitals acquired by private equity firms and 293 matched control hospitals between 2008 and 2019. Post-acquisition, the percentage of patients rating hospitals as a 9 or 10 showed minimal change at private equity-acquired hospitals (65.0% to 65.2%). However, it increased at control hospitals (66.2% to 69.2%), resulting in a differential change of -2.4 percentage points (95% CI, -3.9 to -0.9).

The difference between private equity-acquired and control hospitals widened each year post-acquisition, peaking in the third year (difference-in-differences estimate, -5.2 percentage points; 95% CI, -8.8 to -1.5).

Additionally, the percentage of patients who would definitely recommend the hospital decreased at private equity-acquired hospitals post-acquisition (66.9% to 65.5%) but increased at control hospitals (68.2% to 69.3%), resulting in a differential change of -2.1 percentage points (95% CI, -3.6 to -0.7). The difference between private equity-acquired and control hospitals increased each year post-acquisition, peaking in the third year (difference-in-differences estimate, -4.4 percentage points; 95% CI, -8.0 to -0.70).

As for the secondary measures, there was a decrease in patient-reported responsiveness of hospital staff post-acquisition at private equity-acquired hospitals vs control hospitals (difference-in-differences estimate, -1.3 percentage points; 95% CI, -2.4 to -2.0). However, no differential change was observed across the other measures.

The researchers acknowledged their study’s limitations, one being that it did not include data beyond 2019 due to the COVID-19 pandemic; their findings could have been different if they included data from more recent years. However, the researchers remained confident in their findings.

“Improving patient-centered care is a major policy priority, and these findings raise concerns about the implications of private equity acquisitions on patient care experience at US hospitals,” the authors concluded.

References

1. Bhatla A, Bartlett VL, Liu M, Zheng Z, Wadhera RK. Changes in patient care experience after private equity acquisition of US hospitals. JAMA. Published online January 09, 2025. doi:10.1001/jama.2024.23450
2. Global healthcare private equity report 2024. Bain. Accessed January 31, 2025. https://www.bain.com/insights/topics/global-healthcare-privateequity-report/