Is Private Equity Acquisition of Hospitals a Sentinel Event?
Recent research suggests PE acquisition is life-threatening. Should it be reportable?
The Frontier Psychiatrists doesn’t shy away from the critical questions. It’s a newsletter and then some.
I recently wrote an article about death by suicide after treatment in an acute care setting as a new sentinel event up to one week later. Sentinel Events are defined like this:
A sentinel event is an unexpected occurrence involving death or serious physical or psychological injury or the risk thereof. Serious injury specifically includes loss of limb or function. The phrase "or the risk thereof" includes any process variation for which a recurrence would carry a significant chance of a serious adverse outcome. Such events are called "sentinel" because they signal the need for immediate investigation and response.
Although death by suicide is one such outcome, today I have a provocative question: is acquisition by private equity also in the same category?
Falls with serious injuries are consistently among the Top 10 sentinel events reported to The Joint Commission’s Sentinel Event database*, which has 465 reports of falls with injuries since 2009, with the majority of these falls occurring in hospitals. Approximately 63% of these falls resulted in death, while the remaining patients sustained injuries. In addition, the ECRI Institute reports a significant number of falls occurring in non-hospital settings such as long-term care facilities.
And here it gets pretty relevant to my provocative question…the Joint Commission notes: Analysis of falls with injury in the Sentinel Event database reveals the most common contributing factors pertain to:
Inadequate assessment
Communication failures
Lack of adherence to protocols and safety practices
Inadequate staff orientation, supervision, staffing levels or skill mix
Deficiencies in the physical environment
Lack of leadership
Far be it from me to accuse excellent business luminaries working in Private Equity hospital takeovers, but…the data presented in JAMA this week is straightforward. In an article entitled:
Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition
Spoiler alert: the changes were not favorable. Top-line findings include:
Findings In a difference-in-differences examination of 662 095 hospitalizations at 51 private equity–acquired hospitals and 4 160 720 hospitalizations at 259 matched control hospitals using 100% Medicare Part A claims data, private equity acquisition was associated with a 25.4% increase in hospital-acquired conditions, which was driven by falls and central line-associated bloodstream infections.
When it comes to falls specifically, a JCO sentinel event, they found that this increase in hospital-acquired conditions was driven by a 27.3% increase in falls (P = .02).
These falls are expensive to all of us as taxpayers, according to the CDC:
In 2015, the medical costs for falls totaled more than $50 billion.11 Medicare and Medicaid shouldered 75% of these costs.
As of 2018, there was $100 billion of “investment” of pensioner money by PE in healthcare. Now, they aren’t responsible for all the falls, of course. But a 27+% Increase in fall risk is a huge deal. This is the tip of a very titanic iceberg. There are line infections and all the other harmful things that aren’t reported as sentinel events. Those bad things also suck! This might have something to do with the massive attrition of healthcare workers…
As reported in Becker's Hospital Review:
An estimated 145,213 healthcare providers left the workforce from 2021 through 2022, according to an Oct. 16 report from Definitive Healthcare.
According to its analysis of medical claims, that includes 71,309 physicians who left the workforce from 2021 through 2022.
To be clear, this is almost double the number of new doctors we can crank out per year (Data from NRMP)
The 2022 Main Residency Match included 39,205 total positions, the largest number on record. Of those, 36,277 were first-year (PGY-1) positions.
We are burning out doctors and other health professionals twice as fast as they can be replaced. We have decided as a culture to allow “savvy investors,”…and “business people” to buy our hospitals, which are making them more deadly. For us. As patients. It’s so bad the doctors are all quitting. And these savvy vampires, sorry, investors? They can’t run a business that makes money in American healthcare.
How long do we let this go on?
Profit first, patient health dead last (pun intended). I’m almost too afraid to ask just ust how big is this iceberg?
Negative side effects are a feature of PE, not a bug.
As in any enterprise when price and speed (returning capital to limited partners) are the priorities, sacrificing quality is taken as a given. The only question is how far they can push until the ramifications impact one of the other two legs of the value equation (price/quality/timing).
And PE fund managers will never shy away from finding out.