Private Equity in Healthcare
The Rise of Private Equity in Health Care -- Not a Uniquely American Phenomenon (The New England Journal of Medicine)
Yashaswini Singh, Erin Fuse Brown, and Irene Papanicolas
Private equity investment in the United States has become an increasingly hot topic – with many debating whether the industry’s prioritization of short-term profitability over long-term investments make it an appropriate fit for patient care. While the issue of private investment in healthcare may appear to many to be a uniquely American phenomenon, given this country’s market-based system, this new article highlights how other high-income countries are similarly seeing a rise in private investments as well. Countries with health care systems that are typically funded by taxes and are under the purview of the government (e.g., United Kingdom and Sweden), countries with national health insurance systems (e.g., Canada and Australia), and countries with social insurance models (e.g., Germany and France) are also seeing increases in private investments. In most countries, private investments are going toward outpatient clinics and practices in lieu of hospitals, which tend to be predominantly public-owned, not-for-profit organizations. The growing influence of private equity in health care around the world could present more opportunities to examine policy responses and case studies on how to approach private investments while maintaining high quality patient care.
Increases in Physician Professional Fees in Private Equity-Owned Gastroenterology Practices (Health Affairs)
Yashaswini Singh, Zirui Song, Daniel Polsky, and Jane M. Zhu
As health systems increasingly consolidate physician practices, some patients have turned to non-health system settings for lower-cost care. However, growing acquisitions by private equity firms of independent practices is increasingly being seen as a threat to maintaining these lower prices. In a new study in Health Affairs, researchers sought to assess whether private equity acquisitions truly affected prices for both non-health system-affiliated and independent gastroenterology practices. The authors found that on average, prices increased by approximately $92 per claim (up 28.4%) for services when acquired by private equity firms. Fee increases were primarily driven by a 78.1% increase in professional fees, while facility fees did not reflect statistically significant changes. These findings can help health policy professionals allocate a focus towards professional fees when determining ways to improve the affordability of care in outpatient settings.
Understanding Private Equity-Owned HHAs in the U.S.: A Performance Comparison Between PE-Owned and Non-PE-Owned Agencies (Health Policy)
Mohammad Ishtiaque Rahman
Private equity (PE) ownership in the healthcare sector is gradually increasing, and the home health agency (HHA) market is no exception. In recent years, PE firms have been acquiring a greater share of the HHA market, subsequently leading to questions of how PE-owned HHAs fare in comparison to their non-PE-owned counterparts. Using data from the Centers for Medicare and Medicaid Services (CMS), a new study assessed the impact of PE-ownership on fourteen quality and outcome measures ranging from care quality to patient outcomes and operational efficiency. The results demonstrated the PE-owned HHAs were stronger than non-PE-owned HHAs when it came to timely care initiation and patient improvement in regard to mobility and self-care but underperformed when it came to long-term outcomes. In all, while PE-owned HHAs are more efficient in certain areas of patient care, they require increased improvement in long-term care outcomes and sustainable care quality. Thus, policymakers should continue to monitor these types of statistics to enact measures that upkeep patient well-being.
Healthcare Markets and Competition
Association of Hospital Consolidation with Cancer Outcomes (INQURY: The Journal of Health Care Organization, Provision, and Financing)
Justin Graff, Mahnoor Ayub, Prashanth Prabakaran, Brendan Keelan, and John D. Cramer
Since 2010, the U.S. market has trended towards increased consolidation by way of hospital mergers. While these mergers have been driven by several factors including policy changes, reimbursement, economies of scale, and quality improvement, limited insights have been gleaned regarding the connection between mergers, quality of care, and cancer outcomes. Researchers studied these connections in a new study in INQUIRY, where they assessed hospital consolidation on the Herfindahl-Hirschman Index (HHI) against factors such as the likelihood of early-stage cancer diagnosis and overall survival rates. In all, the authors found that hospital consolidation may produce some benefits for cancer patients – although those benefits are not evenly distributed across different types of cancer. The authors recommend further studies to better understand specifically how hospital consolidation affects cancer outcomes.
How Economic Policies Which Drive Competition Amongst Hospitals Impacts Quality of Care: The Case of the English NHS (A Systematic Review) (The American Journal of Surgery)
Diego Najera Saltos, Søren Rud Kristensen
Over the past three decades, England’s National Health Service (NHS) has faced significant reforms ranging from impacts to the internal market to patient choice reform. A new study in the American Journal of Surgery systematically reviewed how economic policies influencing hospital competition affected care quality, focusing on effectiveness and access indicators. After screening 308 studies from four databases (Embase, Global Health, HMIC, and Medline), the authors studied 12 projects that met their inclusion criteria focused on surgical care within the NHS. Researchers found that competition generally improved the quality of surgical care, and that competition affected effectiveness and access dimensions generally. While competition may not lead to performance improvements in all areas, they found that socioeconomic equity did not undermine competition. The authors suggest that the findings of this study could be applied to surgical practices in the U.S. but cautioned policymakers to address the risks of patient selection bias and regional disparities to ensure broader equitable improvements across surgical specialties.