No News Is Good News in this Study of Private Equity and Healthcare

When it comes to private equity (PE) ownership in healthcare, the news is bad most of the time. Study after study lists correlations between PE ownership and worse patient care outcomes.

Take this study, published last fall in the Annals of Internal Medicine. It said the emergency department mortality rate went up at hospitals after a PE firm acquired them. The study linked worse outcomes to reductions in emergency department staff and salaries.

So, it seems only fair to comment on the rare study that didn’t find a positive correlation between PE ownership and worse patient outcomes. That study was published earlier this month in JAMA Health Forum.

Five researchers from Brown University and the University of Chicago wanted to know what happened to patients after a PE firm bought their primary care physician or practice. Specifically, they wanted to know if more patients ended up in the emergency department or in the hospital after a PE firm acquired the practice. The short answer is no, and that’s why the results are news.

The study pool consisted of about 24,000 Medicare beneficiaries in a primary care practice bought by a PE firm and a matched set of about 122,000 Medicare beneficiaries in a primary care practice not owned by a PE firm. The study period was 2016 through 2022.

The researchers found no difference between the two groups of patients on all-cause hospitalizations or potentially avoidable hospitalizations for ambulatory care-sensitive conditions. The patients in PE-owned practices actually had slightly fewer all-cause emergency department visits.

“While prior studies have documented adverse outcomes in nursing homes and hospitals, our results suggest that PE’s effects on care quality are not uniform across sectors,” the researchers said. “Within primary care, our findings suggest that PE ownership does not immediately degrade core primary care functions.”

Sounding almost embarrassed by their results, the researchers felt compelled to add: “More broadly, our findings should not be interpreted as evidence that PE acquisitions of physician practices should proceed without oversight.”

That’s a big “Yes, but…”

Whatever. My name isn’t on the study, but it is part of this blog post. I will acknowledge that I’ve called for ownership status to be a formal quality measure, considering all the other research that’s shown a link between ownership and outcomes. This study doesn’t change my mind, but it did give me something to think about.

Like 4sight Health founder and CEO David W. Johnson likes to say, PE is amoral like nuclear power. It’s neither inherently good nor inherently evil. It’s how you use it that matters. If that’s true, then we can use PE to build better healthcare. If we want to.

Thanks for reading.