Nurse or capital? The consequences of private equity in healthcare!

Nurse or capital? The consequences of private equity in healthcare!

In recent years, the role of private equity (PE) firms in the U.S. healthcare sector has become increasingly important. A recent study conducted by Merih Sevilir from ESMT Berlin and other scientists examines the impact of PE takeovers on hospital performance. The research analyzes over 1,200 hospital acquisitions between 2001 and 2018 and uncovers key insights into the impact of these financial investments on patient care and hospital operations.

The results show that hospitals acquired by PE firms do not have higher closure rates. Instead, these facilities are seeing improved operational profitability even though the number of medical staff remains unchanged. A key trend is the reduction of administrative costs, which can be observed particularly in formerly non-profit hospitals. Here, the number of administrative employees fell by 33 percent in the long term. Loud esmt.berlin However, there is evidence of a decline in patient satisfaction, which may be due to the reduced number of administrative staff.

Financial impact and resource utilization

A supplementary analysis takes a closer look at the financial resources that flowed into healthcare acquisitions between 2018 and 2023, totaling USD 505 billion. However, there are also dark sides here: In some cases, these takeovers led to the sale of land and buildings, which created additional financial burdens for the hospitals through rent payments. Examining the changes in capital investments of acquired hospitals, they found that they fell by 15 percent in the two years after the acquisition, while control hospitals saw an increase of 9.2 percent.

The data shows that 61 percent of acquired hospitals had reduced capital investments post-acquisition compared to 15.5 percent of control hospitals. These trends suggest that private equity takeovers are not only having a positive impact on the financial values ​​of institutions. pmc.ncbi.nlm.nih.gov

Quality of patient care in focus

In addition to the financial impact, patient safety is also being scrutinized. An analysis of data from over 662,000 hospitalizations at 51 private equity hospitals shows that Medicare beneficiaries here experienced a 25.4 percent increase in hospital-acquired adverse events compared to control hospitals. These results raise questions about clinical quality and patient outcomes in PE-managed hospitals.

Overall, it can be said that visible equity takeovers not only have positive effects on efficiency and profitability, but also pose potential risks for patient satisfaction and safety. The study situation still needs to be specifically examined in order to obtain a comprehensive picture of the impact of private equity on the healthcare sector and to predict future developments. Experts are therefore calling for further research into the financial outcomes and impact on patient care following such acquisitions. zm-online.de