Health Wanted: Private Equity

The Episode

The topic: Private equity is not just taking over companies—it’s increasingly gaining control of health care facilities as well. This week on Health Wanted, host Laurel Bristow and guest Megan Greenwell explain private equity and how it can lead to lower-quality care for patients and financial instability for hospitals.

LISTEN TO THE EPISODE NOW

The takeaway: Private equity ownership is increasing in the health care sector. While some facilities continue to function well with their new management, others have become less financially stable and started to provide worse care for patients.

• Private equity is a type of investment where firms put in money to take over companies and manage their decisions. Often, these firms focus on maximizing profits by raising prices, cutting down the workforce, and reducing services. This way, the private equity firm can make money, while the burden usually falls on the original owners, workers, and customers.
• Between 2012 to 2021, there was over a 600% increase in private equity firms taking over originally physician-owned practices. 8.5% of all private health care facilities in the U.S. are currently owned by private equity firms. This includes hospitals, rehab centers, nursing homes, and more.
• Hospitals owned by private equity firms may have worse patient outcomes. On top of a 25% higher risk of hospital-acquired complications (e.g., fall injuries or secondary infections), many hospitals owned by private equity experience major staffing cuts. With fewer staff taking care of the hospital and patients, the quality of care can decline.
• Companies owned by private equity are about 10 times more likely to file for bankruptcy than companies that are not owned by private equity. Bankruptcies do not threaten the financial gain of private equity companies, but they can lead to health care facility closures, which is a serious concern for the hospital’s patients and community.

The Interview

The guest: Megan Greenwell
 
The key takeaways:

• Historically, hospitals were primarily charitable organizations run by religious groups and nuns. Even for most of the 20th century, hospitals were run by non-profits. It was only recently that private companies saw the financial potential in health care and pushed for privatization.
• Rural hospitals are especially common targets for private equity investments because they get the majority of their funding from Medicaid and Medicare, which guarantees a level of income. Even when private equity ventures fail, the private equity firm often profits because the financial burden is still on the original company.
• Sometimes, private equity firms sell the land or property the health care facility sits on and then lease it back to the original company at a high price. This way, the firm makes more money, but the health care facility has to spend money on rent that could have gone to improving patient services.
• There are no policies on the federal level to regulate private equity, and 88% of members of the U.S. House of Representatives and Senate receive donations from private equity. However, some states have laws to regulate private equity policy in areas of health care.

The Listener Questions 

Does soda hydrate as well as water?

In a previous episode, I talked about a study that found that drinking flat water versus sparkling water resulted in the same level of hydration.

That study also looked at flat water versus things like soda, juice, and tea and found no difference in urine output, which they use as a proxy for hydration.

If somebody hates water, they will be more hydrated drinking three Diet Cokes than if they choke down one small glass of water.

The additives in Diet Coke and the sugar content of other sodas or juices are not good for health. But when it comes to hydration alone, they are doing the same thing.

Is the plague back?

There are three types of plague, but they are all caused by the same bacteria: Yersinia pestis. There’s bubonic plague, which affects the lymph nodes; septicemic plague, which affects the blood; and pneumonic plague, which affects the respiratory system.

Bubonic plague was known as the Black Death and caused a lot of damage throughout history. It gets its name from the fact that when the bacteria infect the lymph nodes, they swell and turn black.

In July, someone in Arizona died of pneumonic plague, which is rarer than bubonic plague and happens when the bacteria infect the lungs. Without treatment, pneumonic plague is always deadly.

It’s unclear how this person was infected. With the bubonic plague, people can be infected by flea bites. With bubonic or pneumonic plague, sometimes people can be infected by their pet cats. The cats can get infected from eating infected rodents and spread it to their owners through droplets.

Sometimes people are infected by coming into close contact with dead animals.

The good news about the plague is that it’s very treatable with antibiotics now.

There are only about seven cases of plague in the U.S. every year, typically in the American Southwest, because plague circulates amongst rodents.

Plague is more endemic and more frequent in other parts of the world. While it is very unfortunate that someone recently died of plague in the U.S., it’s not unheard of, and also not a sign that plague is becoming a bigger concern.

Catch all the listener questions and Laurel’s answers on the full episode of Health Wanted by:

• Streaming at wabe.org or the WABE app
• Subscribing on Apple or Spotify
• Watching on WABE's YouTube channel