Patients treated at hospitals owned by investment companies are more likely to die than at other healthcare institutions, a new study suggests.

Roughly 1 in every 12 hospitals in the United States, or about 488 facilities, belong to private equity firms. These firms are a kind of investment company that purchases businesses to generate profit. 

These institutions have long been prone to cost-cutting measures like staffing cuts and closures to increase profits.

Now, a study from researchers at Harvard University, the University of Pittsburgh and the University of Chicago compared emergency room visits, intensive care unit (ICU) stays and deaths in private equity hospitals to those not acquired by private equities, such as public or private non-profit institutions.

Using 10 years’ worth of Medicare claims from 49 private equity hospitals and nearly 300 public or non-profit controls, researchers found a 13 percent increase in deaths in people who went to a private equity ER compared to those who sought care at a control hospital.

People in a private equity hospital were also 14 percent more likely to be transferred to another hospital, which can disrupt care and make patients more vulnerable to adverse events like infection. 

And after a hospital was acquired by private equity, salaries dropped by up to 18 percent compared to controls, which could lead to staff leaving or compromising patient care.

The findings come as 700,000 Americans die in hospitals every year, most often from sepsis, the body’s overreaction to an infection that causes the immune system to attack healthy organs and tissues.

Researchers in a new study found private equity hospitals had a 13 percent increase in deaths compared to control hospitals (stock image)

Zirui Song, senior study author and associate professor of health care policy in the Blavatnik Institute at Harvard Medical School, said: ‘Staffing cuts are one of the common strategies used to generate financial returns for the firm and its investors.

‘Among Medicare patients, who are often older and more vulnerable, this study shows that those financial strategies may lead to potentially dangerous, even deadly consequences.’ 

Average base salary in private equity hospitals tends to be lower than public or non-profit institutions, though the range varies based on specialty and experience. 

The study, published earlier this month in the journal Annals of Internal Medicine, compared just over 1 million emergency department visits and 121,000 ICU hospitalizations across 49 private equity hospitals to 6 million ER visits and 760,000 ICU hospitalizations in 293 control hospitals. 

The team used Medicare claims and cost report data from 2009 to 2019 to tally up hospitalizations and care prices. 

Private equity hospitals were followed for three years before and after acquisition. The specific hospitals are not named in the study. 

The team found Medicare beneficiaries in private equity ERs experienced seven additional deaths per 10,000 visits after they were acquired compared to control hospitals, a 13 percent increase. 

Additionally, the amount of ICU patients who were transferred to another hospital increased from 4.4 percent in control hospitals to 5.1 percent in private equity institutions, a 14 percent increase.

The above graph shows an increase in average deaths after private equity hospitals were acquired on average. The researchers found seven additional deaths per 10,000 hospitalizations

Moving to another hospital increases the risk of poor communication about the patient’s care between the institutions, causing delays in treatment or incorrect medications or treatments to be given. 

The transfer process itself from a sterile environment may also increase the risk of infections, which can later turn into sepsis. 

In terms of hospital staff, salaries in the ER decreased by 18 percent and in the ICU by 16 percent in private equity hospitals after acquisition compared to control hospitals. Staff was also cut by 12 percent. 

Song said: ‘These are places where cutting staffing often means cutting the capacity to take care of people.’

The study was partly funded by the National Institutes of Health and Agency for Healthcare Research and Quality. 

No specific hospitals are named in the study, but private equity hospitals are spread across the nation, with the highest concentration located in Texas, which has 108. 

This makes up one in five total hospitals in the state, including rehabilitation hospitals in major cities like Dallas, Austin and Houston.