Why is for-profit healthcare seen as problematic by some people, and what are the alternative models that could work better?
For context, this is a question I answered on Quora
Because healthcare institutions motivated solely by myopic greed create worse outcomes for patients, especially elderly and disabled patients, and impose higher cost burdens on them while providing lower quality of care. We have peer reviewed evidence of this problem as private equity firms have bought out nursing homes, hospices, clinics, urgent cares and hospitals solely to squeeze as much short term profit out of them as feasible.
A senate investigation published this year in a Senate Budget Committee Staff Report reviewed over one million pages of documents focusing on two private equity buyers in particular, Leonard Green & Partners (LGP) and Apollo Global Management, notes that in their pursuit of maximum short term profits private equity acquired hospitals take on higher debt burdens and management fees, reduce services, cut staff and take little interest in patient outcomes and quality of care. Private equity acquired hospitals experience longer wait times, poorer building maintenance, and increases in health and safety violations.
A systematic review of 55 studies that assessed the impact of private equity ownership on health outcomes, costs to patients and/or payers, costs to operators, and quality of care provided in multiple healthcare operators owned by private equity firms found that private equity ownership of healthcare operators is associated with upwards of 32% higher costs to patients and payers and a lower quality of care compared to non-private equity owned operators. Private equity owned nursing homes in particular had 11–32% higher cost burdens, fewer registered nurses on staff and weaker performance on infection control and falls compared to the same nursing homes prior to acquisition and experienced a relative increase in ambulatory care sensitive emergency department visits compared to pre-acquisition. Private equity ownership of hospitals is associated with a mean 15–25% higher costs to patients and payers, lower staffing levels among nurses and weaker performance on quality measures like patient safety, satisfaction, and adherence to clinical guidelines.
A follow-up systematic review that included 12 new studies published within a year of the last systematic review found a 25% increase in hospital-acquired complications (e.g., falls, central line-associated bloodstream infections) in private equity acquired hospitals compared to non-private equity hospitals, despite lower surgical volumes. Private equity ownership was also consistently associated with higher costs, with increases in per-patient expenditures ranging from 4% to 16% across specialties (e.g., dermatology, anesthesiology) which were more pronounced in markets where PE-owned practices held >30% market share, suggesting reduced competition. Decline in patient satisfaction was also apparent by the third year post-acquisition.
A scoping review encompassing research conducted on private equity hospital acquisition over the past two decades (n = 28) also found no consistent improvement in healthcare quality or patient outcomes and increased costs to patients and payers. Among the 28 studies reviewed across multiple healthcare institutions only 1 nursing home study and 1 hospital study found evidence of better healthcare outcomes after private equity acquisition while about 20 studies, including 4 nursing home studies, found net harmful affects.
Private equity acquisition has also been found to deplete hospital assets rather than expand them.
Decline in Quality of Care (often with fatal results)
An observational, quasi-experimental analysis comparing hospitals acquired by private equity firms to matched control hospitals across Medicare part A claims found that private equity acquisition was associated with a 25.4% increase in adverse health outcomes, including a 27.3% increase in patient falls and a 38% increase in central line-associated infections. Surgical site infections doubled from 10.8 to 21.6 per 10,000 hospitalizations at private equity hospitals despite an 8% reduction in surgical volume at private equity acquired hospitals. These increases occurred despite a shift toward admitting younger, lower-risk Medicare patients.
Medicare beneficiaries undergoing lung resection at private equity owned hospitals had higher rates of serious complications, 30 day readmission, longer post-operative length of stays, and 30 day mortality. Private equity owned hospitals also preformed less than half as many lung resections annually as non-private equity owned hospitals.
A prospective cohort study of patients who underwent esophagectomy at both private equity acquired hospitals and non-acquired hospitals (n = 9,462) found that patients treated at private equity–acquired hospitals had significantly higher, post-operative complications, failure to rescue, and 30-day mortality.
Private equity owned home health agencies (hospices) under preformed non-private equity owned home health agencies in long term care outcomes such as timely physician-recommended medication actions, preventable readmission rates, and discharge to the community.
The alternative to healthcare driven by myopic greed is healthcare driven by fulfilling the needs of patients: you know such as triage and the hippocratic oath, not cutting services or staff for higher short term profits. Hospitals are and should remain public health institutions that care for patients regardless of their wealth. Profit should come second to that.