Mike's Blog

While academic medical centers may be the source for next generation health care interventions and solutions, dissemination and implementation (D&I) of those interventions require a health care infrastructure that can efficiently absorb and deploy those interventions in a manner that can offer patients the opportunity to reap the benefits of these innovations. There clearly are a plethora of issues confronting medical care in the US, but one glaring development over the past decade has been the invasion by private equity (PE) into health care delivery. Ivy-covered academics within ivy-covered walls may be partially insulated from this phenomenon, but the outcomes from these fandangos will affect the entire ecosystem.

The most recent fiasco has been Steward Health Care seeking bankruptcy protection involving multiple hospitals across several states. The state of Massachusetts has been scrambling to work out arrangements to preserve services. Ohio is also dealing with the Steward aftermath. Journalists are just beginning to dig into the basis for Steward’s financial troubles which can make for some juicy reading (see here and here). A recent report from the Private Equity Stakeholder Project finds “93% of the most distressed healthcare companies” are owned by private equity firms. Federal legislation has been proposed, although passage is unlikely, at least for the foreseeable future. Federal inaction has prompted several states, including California, Connecticut, Minnesota, and Massachusetts to explore options for injecting more transparency into these practices. Judith Garber of the Lown Institute has remarked on ‘financialization’ as an emerging trend where not only does private equity buy up healthcare providers, but healthcare institutions operate their own investment arms and even initiate future private equity activity. One recent Stat opinion piece referred to private equity as “health care’s vampire.”

At the same time, scholarly analysis has been slowly emerging. A BMJ systematic review last year found that PE ownership was “associated with harmful impacts on costs” as well as “mixed to harmful impacts on quality.” A study late last year found PE “acquisition was associated with increased hospital-acquired adverse events.” More recently, an analysis on the characteristics of healthcare facilities that PE firms targeted revealed that rather than focusing on hospitals that are struggling (a typical rationale to justify PE engagement), successful entities were targeted for acquisition which makes sense given the usual PE strategy of loading acquired entities with more debt. Finally, another recent analysis examined hospital assets before and after PE acquisition found depletion, rather than augmentation post-acquisition.

On one level, much of these activities will only peripherally involve most CTSAs as large tertiary care academic medical centers are unlikely to be in the crosshairs of PE acquisition considerations. Any resolution is likely to require a protracted period of things getting much worse before relevant actors may consider direct interventions. On the other hand, there are potential short- and long-term impacts to consider. In the short term, disruptions with available health care options for patients will likely result in local and regional officials engaging with larger operational health care facilities such as academic medical centers placing additional burdens and stress on those facilities and staff. In the long term, reduced health care service options will hinder the dissemination and implementation of CTSA derived health care innovations as health care providers struggle to deliver routine, basic care. On the bright side, the CTSAs may find new ways to take action on these problems rather than waiting for them to resolve.

“Never sure, Lisbeth,” said Styx, backing away to consider her work.

“Certainty is a sign of inferior intellect.”

- Joel Shepherd, Defiance