The Impact of Private Equity Firms on Rural Hospitals: A Call for Reform

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Originally published on Medriva

By Mason Walker

Recent studies have sparked discussions around the role of private equity firms in the acquisition of hospitals and the subsequent impact on patient outcomes. These findings have particularly underscored the potential threat to the independence of rural hospitals and their ability to provide meaningful patient care. The president and CEO of Katherine Shaw Bethea Hospital, Dr. David Schreiner, has expressed significant concerns about the situation, emphasizing the need for fundamental reform in supporting these rural hospitals.

Private Equity Acquisition and Adverse Patient Outcomes

Several news articles and studies have been shedding light on the consequences of hospital acquisition by private equity firms. A major study found an alarming increase in serious medical complications when hospitals were bought by investors. Specifically, there was a 25 percent increase in adverse events among Medicare patients, including surgical infections, bed sores, central line infections, and falls. The same study, published in JAMA, compared the data from hundreds of thousands of hospitalizations at private equity-owned hospitals to millions of hospitalizations at non-private equity-owned control hospitals from 2009 to 2019.

Rising Concerns: Reduced Care Quality and Workforce Cuts

These findings have intensified concerns about the impact of private equity firms on healthcare delivery. The data suggests that patients receiving care at private equity-owned hospitals are more susceptible to hospital-acquired adverse events than patients at hospitals not owned by private equity firms. This has led to apprehensions about reduced care quality and potential workforce cuts. Private equity firms currently own at least 130 hospitals in the country’s rural areas.

The Debate: Access to Capital vs Personal Attention

While private equity firms do provide access to capital, a critical factor in sustaining and expanding healthcare services, there are increasing worries about the impact on personal attention and patient experience. Many believe that private equity-owned hospitals prioritize profit over provider retention and patient safety. In contrast, some argue that private equity investments improve care and expand access to it, especially in low-income, rural communities.

Steps Towards Reform

In the wake of these findings, a Senate investigation has been launched to examine the effects of private equity hospital ownership. The Biden administration has also moved to cut down on private equity’s consolidation in the healthcare industry, announcing initiatives aimed at scrutinizing acquisitions and increasing transparency. However, the conversation around the role of private equity in healthcare is far from over.

The Importance of Local Healthcare

Dr. David Schreiner has particularly emphasized the importance of local healthcare and the role of rural hospitals as economic drivers in their communities. He stresses that rural hospitals must retain their independence to continue providing meaningful care to patients. With the potential threat posed by private equity firms in the form of reduced care quality and workforce cuts, there is a clear need for fundamental reform to support rural hospitals.

The challenges faced by rural hospitals in considering acquisition by private equity companies highlight the pressing need for a balanced approach, one that ensures the sustainability and quality of healthcare services while preserving the vital role of rural hospitals in their communities.

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