Private Equity Ownership in Health Care Linked to Increased Costs, Potential for Worsening Outcomes

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A systematic review of 55 studies conducted in the US and abroad details the effects of private equity ownership in health care settings on costs to patients/payers as well as clinical outcomes.

A new study from an international team of investigators is sending a grim warning related to the future of health care in the US and abroad as private equity ownership becomes more common.

A systematic review of more than 50 studies, including 47 US-based studies, investigators purport being unable to identify any consistently beneficial impacts of private equity ownership across a slew of specialty areas, but highlighted private equity ownership being associated with both increased costs to patients/payers as well as mixed to harmful impacts on quality of care.1

“We found that [private ownership] in the healthcare sector has markedly increased, that this trend has been accelerating across many healthcare settings and service types, and that this has important implications for patient or payer costs and healthcare quality,” wrote investigators.1

Led by Joseph Dov Bruch, PhD, of the University of Chicago, along with colleagues representing the University of Toronto, University of Texas School of Public Health, and the Ben-Gurion University of the Negev in Israel, the current study was launched as a result of the investigator’s concern over the lack of understanding of private equity ownership on outcomes within health care systems despite its rapid increase in prevalence. With this in mind, investigators designed their research endeavor as a systematic review of studies examining trends and impact of private equity ownership of health care operators from within the PubMed, Web of Science, Emboss, Scopus, and SSRN databases.1

Searching the aforementioned databases from 2000-2023, investigators identified 1778 records detailing research studies of any design evaluating private equity owned healthcare operators. After elimination of duplicates and a title and abstract screening, 81 records were assessed for eligibility. Of these, 26 additional records were excluded, leaving 55 for inclusion in the systematic review.1

Of the 55 included in the final sample, 32 evaluated the impacts of private equity ownership on at least 1 category of health outcomes, costs to patients or payers, costs to operators, quality, or a combination of these factors. A group of 38 studies reported trends or prevalence of private equity ownership among health care operators and 15 reported findings for both impacts and trends.1

Investigators pointed out 47 of the 55 studies were based exclusively in the US. Other countries represented in the systematic review included Sweden, the United Kingdom, Canada, Germany, the Netherlands, and Norway. As a group, the 55 studies assessed private equity ownership in 16 different settings, including nursing homes(n = 17), hospital settings(n = 9), dermatology(n = 9), ophthalmology (n = 7), urology (n = 4), gastroenterology (n = 3), orthopedics (n = 3), fertility (n = 2), obstetrics and gynecology (n = 2), and others.1

Upon analysis, the most consistent pattern in terms of impacts measured was observed for costs to patients or payers, which was examined in 12 studies. Among these studies, no studies reported a lowering of costs to patients or payers, but 9 reported an apparent increase in cost to payers and 3 found no differences. Investigators pointed out the risk of bias was considered more in 10 of these studies, considered serious in 1 study, and considered critical in 1 study. When limiting their analysis to those with moderate risk of bias, 8 reported harmful impacts on costs to patients or payers and 2 reported neutral findings.1

Among 8 studies examining health outcomes with private equity ownership, 2reported beneficial impacts, 3 reported harmful impacts, and 3 reported neutral findings. Investigators noted 6 of these studies were deemed to have had a moderate risk of bias and 2 had a serious risk. Further analysis revealed costs to operators was reduced in 3 of 5 studies examining the topic, while the remaining 2 purported increased costs. Investigators noted the volume of studies prevented the group from drawing definitive conclusions.1

“The current body of evidence is robust enough to confirm that [private equity] ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting, and possibly increased regulation,” investigators concluded.1

In a linked editorial, Merrill Goozner, a Chicago-based journalist, details how the rapid influx of private equity ownership in health care has created an urgent need for research as well as policy reform to ensure providing affordable, quality-driven care remains a priority in health care.2

“Public officials clearly need new and more effective tools for reviewing and approving the terms of private equity’s involvement in healthcare. The best time to stop the deterioration in healthcare quality associated with takeovers is before it starts,” Goozner wrote.2 “Higher quality studies on patient safety and outcomes and the effect of private equity takeovers on communities would greatly bolster the case for legislators proposing stricter regulations.”

  1. Borsa A, Bejarano G, Ellen M, Bruch JD. Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review. BMJ. 2023;382:e075244. Published 2023 Jul 19. doi:10.1136/bmj-2023-075244
  2. BMJ Company. Private equity takeovers of healthcare services linked to patient harm. EurekAlert! July 19, 2023. Accessed July 20, 2023.