Changes in Hospital Income, Use, and Quality Associated With Private Equity Acquisition.

Importance: Rigorous evidence describing the relationship between private equity acquisition and changes in hospital spending and quality is currently lacking. Objective: To examine changes in hospital income, use, and quality measures that may be associated with private equity acquisition. Design, Setting, and Participants: This cohort study identified 204 hospitals acquired by private equity firms from 2005 to 2017 and 532 matched hospitals not acquired by private equity. Using a difference-in-differences design, this study evaluated changes in net income, charges, charge to cost ratios, case mix index (a measure of reported illness burden), share of discharges for patients with Medicare or Medicaid coverage, discharges per year, and aggregate hospital quality measures associated with private equity acquisition through 3 years after acquisition, adjusted for case mix, hospital beds, calendar year, and adjustment for multiple hypothesis testing. In subgroup analyses, changes in outcomes for private equity-owned Hospital Corporation of America (HCA) hospitals and non-HCA hospitals relative to matched controls were assessed. Primary Outcomes and Measures: Eight hospital income and use measures and 3 aggregate hospital quality measures were examined. Results: Relative to 532 control hospitals, the 204 private equity-acquired hospitals showed a mean increase of $2 302 391 (95% CI, $956 660-$3 648 123; P = .009) in annual net income, an increase of $407 (95% CI, $296-$518; P < .001) in total charge per inpatient day, an increase of 0.61 (95% CI, 0.48-0.73; P < .001) in emergency department charge to cost ratio, an increase of 0.31 (95% CI, 0.26-0.37; P < .001) in total charge to cost ratio, an increase of 0.02 (95% CI, 0.01-0.02; P = .007) in case mix index, and a decrease of 0.96% (95% CI, 0.46%-1.45%; P = .002) in share of Medicare discharges. Medicaid's share of discharges (-0.16%; 95% CI, -0.86% to 0.53%; P > .99) and total hospital discharges (98; 95% CI, -54 to 250; P > .99) did not change differentially in a statistically significant manner. The aggregate quality score for acute myocardial infarction increased by 3.3% (95% CI, 1.6%-5.0%; P = .002), and the aggregate score for pneumonia increased by 2.9% (95% CI, 1.8%-3.9%; P < .001) in private equity-acquired hospitals relative to controls. The aggregate score for heart failure (1.3%; 95% CI, -0.2% to 2.7%; P = .92) did not differentially change in a statistically significant manner. In subgroup analyses, HCA hospitals showed similar findings to the entire sample. Among non-HCA hospitals, the only statistically significant relative changes were the increase in the emergency department charge to cost ratio (0.30; 95% CI, 0.12-0.48; P = .02) and the decrease in Medicare's share (-1.15%; 95% CI, -1.88% to -0.43%; P = .02). Non-HCA hospitals showed a decrease in the aggregate heart failure score (-3.3%; 95% CI, -5.3% to -1.3%; P = .01) and no statistically significant changes in the aggregate score for acute myocardial infarction (2.4%; 95% CI, -0.7% to 5.4%; P > .99) or pneumonia (0.2%; 95% CI, -1.4% to 1.7%; P > .99). Conclusions and Relevance: Hospitals acquired by private equity were associated with larger increases in net income, charges, charge to cost ratios, and case mix index as well as with improvement in some quality measures after acquisition relative to nonacquired controls. Heterogeneity in some findings was observed between HCA and non-HCA hospitals.