Private Equity, Greed, and the Deterioration of Medical Care in the United States

Wikimedia Commons: 16th Annual Global Private Equity Conference

by Empea1077, C. C. Attribution-Share Alike 4.0

                                    Wikimedia Commons: 16th Annual Global Private Equity Conference     

 

This post discusses highly troublesome recent developments in the practice of medicine, including in psychiatry. So-called private equity firms have been buying up businesses, streamlining them by cutting staff and making employees work longer hours, loading them up with debt, and stripping out their assets. And then they sell them off at a big profit. They take the money and run, often leaving a hollowed-out shell of a company behind. At present in the United States, they have been buying up medical practices and hospitals at an alarming rate. Are your doctors spending less and less time with you and discharging you form hospital stays prematurely? This may be the reason.

In one recent example from April, financially-strapped Steward Health Care sold its nationwide physician practice to UnitedHealth Group subsidiary Optum. In the wake of this, a U.S. Senate subcommittee met in Boston to address ongoing concerns that the corporatization of healthcare is putting patients and providers at risk. Private equity companies across the country were said to be quietly making profits while infiltrating everything from fertility care to hospice care.

In the case of Steward, the roots of this date back to 2010, when the private equity firm Cerberus Capital Management agreed to acquire the financially struggling non-profit Caritas Christi health system in Massachusetts for more than $800 million. That company now operates more than 30 hospitals as the country's largest private for-profit hospital chain, but Cerberus has been selling off its stake in Steward, leaving the chain saddled with large financial liabilities that are causing future hospital shutdowns.

While screwing over an already struggling hospital system, executives were reaping profits. According to the Wall Street Journal, as the Steward ship was sinking, the CEO bought a $40M yacht!

Ellana Stinson, an emergency medicine physician at Boston Medical Center and president of the New England Medical Association, testified that, "Practicing medicine in PE [private equity]-led places is no longer about patient safety or quality, but about making medical decisions and judgements due to corporate decision-making with profit motives at the expense of patients." Many buyouts are of hospitals and other facilities that are already struggling and may have higher Medicaid and Medicare populations.

Stinson pointed to the more than 550 emergency residency positions that notably went unfilled  in last year's Match cycle as representative of ongoing concerns about this issue. "A profession once competitive when I first began my medical journey is now one of the least competitive fields to enter as students bear witness to the destruction of the profession," she said.

These firms also like to force doctors to spend inordinate amounts of time filling out useless forms on electronic medical records. In a study conducted by Wakefield Research, “An overwhelming 94% of respondents expressed that the absence of user-friendly insights negatively affects patient care, resulting in several harmful consequences,” including “delayed treatment initiation (53%), prolonged hospital stays (52%), and incorrect treatment plans (47%).”

These trends are clearly having major adverse effects on patients. After private equity acquisition, medical centers have exhibited an increase in hospital-acquired adverse events, despite a shift to a lower-risk case mix, as shown by a study of Medicare data. Admission at a private equity hospital was associated with a 25.4% greater risk of hospital-acquired conditions compared with treatment at a non-private equity hospital. Driving the difference were more falls and central line-associated bloodstream infections along with a doubling in surgical site infections, despite fewer central lines placed and a younger and less dually (Medicare/Medicaid) eligible population compared with the controls.

On the psychiatry side, over-medicating patients and under-training staff, as well as rampant falsification of patient records, plagued a North Carolina psychiatric hospital, according to an ongoing series of reports from North Carolina Health News. More than a dozen former employees of Brynn Marr Hospital in Jacksonville, North Carolina described a chaotic and violent environment dangerous for both patients and staff, according to the reports. Sexual violence and rape was a recurrent issue; police reportedly responded to 129 calls for alleged sexual assault and rape at the hospital from January 2019 to September 2023. Other hospitals owned by the same parent company as Brynn Marr, Universal Health Services, have reported similar issues.

 

Another example: Kohlberg Kravis Roberts is an investment company founded in 1976. Recently, KKR acquired hundreds of facilities for people with disabilities, which, under the new ownership, led to conditions in which residents were “consigned to live in squalor, denied basic medical care, or all but abandoned,” according to reportage from Buzzfeed.

Research also suggests  that PE acquisitions are associated with price increases in 8 of 10 specialties, and that these price increases are particularly high in metropolitan areas in which a single PE firm controls more than 30% of the market.”