News: Private equity ED salaries decrease by 18.2% post-acquisition, study shows

Newly acquired private equity hospitals tend to drastically reduce emergency department (ED) salaries, according to a study reported in MedPage Today.

The analysis, conducted by the Annals of Internal Medicine, examined staffing and patient outcomes in EDs and intensive care units (ICU) before and after hospitals were acquired by private equity.

The study examined 1,007,529 ED visits and 121,080 ICU hospitalizations across 49 private equity hospitals between 2009-2019. These patients were then compared with 6,179,854 ED and 760,377 ICU patients across 293 “matched control hospitals” across the same timeframe.

According to MedPage Today, the mean age of Medicare beneficiaries in the private equity ED cohort was 66-67, 58% were women, and 72%-81% were white; for the private equity ICU cohort, the mean age was 73, 50% were women, and 71%-84% were white.

Here are some key highlights from the analysis:

• Post-acquisition, private equity hospitals reduced ED salary expenditures by 18.2% relative to control hospitals
• Post-acquisition, private equity hospitals reduced ICU salary expenditures by 15.9% relative to control hospitals
• Post-acquisition, full-time employees across private equity hospitals were reduced 11.6% relative to control hospitals
• Post-acquisition, salary expenditures across private equity hospitals were reduced 16.6% relative to control hospitals

"Reductions in salary expenditures could be a key mechanism by which cost cutting after private equity acquisition contributes to changes in clinical care and patient outcomes," the authors concluded.

Moreover, the analysis also found that post-acquisition, Medicare beneficiaries deaths in private equity EDs increased 13.4% relative to control hospitals

Commenting on this phenomenon, Zirui Song, MD, PhD, of Harvard Medical School, and co-author observed: "Healthcare remains a human face-to-face endeavor where often you need all hands on deck to take care of someone. It's not surprising that staffing cuts of this magnitude could reduce the bandwidth and capacity to deliver care with undesirable effects on patient outcomes.”

Editor’s note: To read the MedPage Today coverage, click here. To read the full journal article, click here.