Private Equity-Backed Hospitals Appear to 'Cherry-Pick' HF Patients

The acquired hospitals may be inappropriately selecting patients and doing more profitable cardiac caths.

Private Equity-Backed Hospitals Appear to 'Cherry-Pick' HF Patients

Despite treating heart failure (HF) patients with lower clinical risk, hospitals purchased by private equity do not have better clinical outcomes than other sites, new research shows. 

These private equity-acquired hospitals were also more likely to perform cardiac catheterization in HF patients and to transfer out Black patients, report investigators.

“There really seems to be some patient selection going on,” senior investigator Rishi Wadhera, MD (Beth Israel Deaconess Medical Center, Boston, MA), told TCTMD. “This shouldn’t be happening unless it reflects appropriate decision-making. My suspicion is that it does not.”

The study, which was published in JACC, is the latest to highlight concerns that can arise after private equity takes over hospitals. Profit-focused firms have shown an increased interest in acquiring hospitals and cardiology practices, and the thinking is that the acquisition would lead to more resources for the hospital, operational improvements, and streamlined care pathways.

That thinking isn’t backed up by data.

“I would say we now have overwhelming evidence that private-equity takeovers of hospitals tend to worsen care quality and outcomes,” said Wadhera. A 2023 study, for example, showed there was a 25% hike in hospital-acquired adverse events, such as falls and central-line infections, in sites acquired by private equity. Earlier this year, Wadhera and colleagues published a study showing that patient experience worsens once hospitals are bought by firms.

Mary N. Walsh, MD (Ascension St. Vincent Heart Center, Indianapolis, IN), who wasn’t involved in the study, said HF is a “high-cost diagnosis” for hospitals that isn’t always profitable. “In general, these are older people with a lot of comorbid disease,” she said. “The length of stay is long, and the readmission rate is high.”

Walsh, a past president of the American College of Cardiology and medical director of the Heart Failure and Cardiovascular Research Institute, said the study “further amplifies the point that private equity does what private equity will do, which is to try to save money.”

These data suggest that private equity-acquired hospitals are cherry-picking the healthiest patients as part of an effort to improve their bottom lines. It appears that when the hospital changed ownership, there was a push to admit less-ill patients and do more procedures. “I mean, that’s the message,” said Walsh.

More Cath, Fewer Black Patients

The current study focused on outcomes of patients 65 years and older with HF, which is the most common cause of hospitalization among older adults in the United States. The aim, said Wadhera, was to understand the impact of private-equity acquisitions in an older and sicker population with cardiovascular conditions.

“There’s been growing concern that when private-equity firms take over a hospital, they may select for certain types of patients to maximize reimbursement,” he said.

The analysis included 35,631 hospitalizations of Medicare beneficiaries with HF at 41 private equity-acquired hospitals and 178,107 hospitalizations at 192 matched-control hospitals between 2013 and 2019. The research excluded acquisitions that took place during or after 2019 to avoid overlap with the COVID-19 pandemic.

The group used a difference-in-difference design to assess changes in outcomes after private equity acquired the hospitals by evaluating outcomes 3 years before and after the acquisition.

There were no changes in 30-day mortality and revisit rates at the private-equity or control hospitals. The clinical risk scores of HF patients decreased significantly at hospitals bought by private equity compared with the controls, however. Length of stay also decreased at hospitals taken over by firms.

“If the clinical risk of a population is declining after private-equity acquisition, you would potentially expect that clinical outcomes would get better because you’re admitting healthier patients,” said Wadhera. “We saw no evidence of that.”

There was an increased use of cardiac catheterization at the private equity-acquired hospitals, up from 6.6% before the acquisition to 7.4% after it. No change was seen among the control hospitals. While there was no difference in the overall transfer-out rates between the groups of hospitals, the proportion of Black patients with HF transferred to other centers increased among the private equity-backed hospitals.

Selecting Profitable Patients

The study was not designed to understand the reasons for the observed changes. For example, it’s possible that the increased use of cardiac catheterization and higher rates of transfer among Black patients reflects appropriate care, but these changes were not seen either at the control hospitals or in other racial groups.

Compared with those from other races, Black adults tend to have lower incomes and are also more likely to be insured by Medicaid, which reimburses less than private insurance, said Wadhera. “It is possible that these transfer-out patterns reflect the fact that private-equity firms have concerns that reimbursement may be lower for [these types of] encounters.”

Additionally, the increased use of cardiac catheterization, which is a highly reimbursed procedure, occurred despite the lowered clinical risk profile of patients. The worry is that this increase reflects an incentive for the shift toward more profitable procedures, say researchers.

For Walsh, the increase in cardiac catheterization is a telling finding. She noted that the procedure is not routinely performed in a patient with a known HF diagnosis. Physicians are ultimately making the clinical calls here, which raises an important question as to whether they are being pressured to transfer out less profitable patients or to send them for pricier procedures, Walsh explained.

In 2012, the Medicare Hospital Readmissions Reduction Program began penalizing hospitals with higher-than-expected 30-day readmission rates for HF, as well as other conditions. This was part of an effort to link payment to quality of care. Given the high burden of rehospitalization and costs to hospitals, readmissions have “been a diagnosis that hospital administrators have had their eye on for some time,” said Walsh.

With the accumulating data suggesting that patient outcomes worsen after an acquisition, the big question is what policymakers are going to do about it, said Wadhera, adding that these transactions should be monitored more closely. Additionally, he suggested, it might be worthwhile to lower the monetary threshold required to report private-equity firms’ investment in hospitals so that they can be tracked.

Michael O’Riordan is the Managing Editor for TCTMD. He completed his undergraduate degrees at Queen’s University in Kingston, ON, and…

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Disclosures
  • Wadhera reports grants from National Heart, Lung, and Blood Institute, the National Institute of Nursing Research, the American Heart Association, and the Donaghue Foundation. He reports consulting for Abbott Vascular and Chambercardio.
  • Walsh reports no relevant conflicts of interest.

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