The number of psychiatric hospitals owned by private equity (PE) firms increased from 42 in 2013 to 87 in 2021, according to a survey in JAMA Psychiatry. While PE-owned facilities were associated with lower staff-to-patient ratios, they performed better on some quality measures, including lower reported use of restraints and a higher rate of follow-up visits
Morgan C. Shields, Ph.D., of Brown University, and colleagues noted that PE firms acquire ownership of entities with the goal of increasing value for subsequent resale at a profit. “Maximization of short-term profits may not directly translate into higher quality of care for patients and could even undermine quality,” they wrote. “For example, PE firms may reduce staffing or shift responsibility to clinicians with less expertise, even if existing staffing configurations are associated with better patient outcomes.”
The researchers used industry data (Pitchbook and Irving Levin Associates Health Care M&A database) and online searches to create a database comparing 87 PE-owned and 530 non–PE-owned psychiatric hospitals in 2021. The combined sample encompassed all Medicare-participating freestanding psychiatric hospitals in the United States.
PE ownership was not evenly distributed over the United States; rather, the majority of firms were located in Southern states. In 2021, Texas, Louisiana, and Ohio had the highest number of hospitals owned by PE—19, 16, and nine, respectively. New Mexico had the highest proportion of hospitals (75%) owned by PE.
The researchers assessed quality measures at each hospital such as staffing levels, restraint and seclusion rates, readmission rates, and follow-up rates, among others. PE ownership was associated with fewer staff days per patient day among registered nurses (0.12 versus 0.15) and medical social workers (0.02 versus 0.04) compared with non–PE-owned hospitals. Yet, PE-owned hospitals reported fewer hours of restraint use (0.03 versus 0.24 hours per 1,000 patient hours), lower 30-day readmissions (19.40% versus 20.16%), and higher seven-day (29.34% versus 26.28%) and 30-day (52.92% v 49.08%) follow-up visits.
Shields and colleagues noted that “restraint and seclusion measures are crude and prone to both gaming and error, especially given their self-reported nature,” adding that “follow-up and readmission measures, while intended to reflect hospital performance, are also driven by differences in outpatient environments.”
The researchers said that a new patient experience measure added to CMS’ Inpatient Psychiatric Facility Quality Reporting program could be a more sensitive and meaningful measure of inpatient care quality.
For more information, see the Psychiatric News article “Private Equity’s Inroads Into Mental Health Bring Concern.”
(Image: Getty Images/iStock/Sumedha Lakmal)
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