Home health agencies (HHAs) owned by private equity (PE) firms tend to outperform agencies not owned by PE in certain metrics while lagging in others. That’s according to a recent study by Mohammad Ishtiaque Rahman, an assistant professor of computer information systems at Thomas More University in Crestview Hills, Kentucky. The analysis found that HHAs […] The post What Home Health Metrics Tend to Excel – and Lag – Under Private Equity Owners appeared first on Home Health Care News.
Home health agencies (HHAs) owned by private equity (PE) firms tend to outperform agencies not owned by PE in certain metrics while lagging in others.
That’s according to a recent study by Mohammad Ishtiaque Rahman, an assistant professor of computer information systems at Thomas More University in Crestview Hills, Kentucky. The analysis found that HHAs owned by PE firms generally outperformed non-PE-owned agencies in areas such as timely care initiation and improvements in patient mobility and self-care.
However, the PE-owned agencies fell short in areas related to long-term outcomes, such as timely execution of physician-recommended medication actions, rates of preventable readmissions and successful discharge to the community.
The study analyzed 14 quality and outcome measures from the Centers for Medicare & Medicaid Services (CMS) Home Health Compare dataset, covering 2017 to 2023.
PE-owned HHAs showed increased efficiency and enhanced certain aspects of patient care; however, their performance in key long-term care outcomes raises concerns regarding the sustainability of care quality, as indicated by the study.
“PE-owned agencies performed better in star ratings, timely care and patient mobility improvements, suggesting a focus on efficiency,” Rahman told Home Health Care News. “However, higher preventable readmission rates and lower discharge-to-community rates raise concerns about long-term patient care. The higher Medicare spending per episode also suggests different financial strategies. Overall, PE ownership brings benefits and challenges, improving some aspects of care while raising questions about patient recovery and financial incentives.”
The findings appear in the journal Health Policy.
In the U.S., 37 PE firms owned nearly 6% of the nation’s 8,500-plus HHAs, according to a 2023 report from the American Antitrust Institute (AAI) and Americans for Financial Reform Education Fund.
Key factors driving PE interest in health care investments include rising health care spending, uninvested capital reserves in PE funds, and the financial difficulties and failures of health care companies that were exacerbated by the pandemic, according to the AAI report.
Home health care is one of the fastest-growing sectors in the health care industry, attracting considerable interest from PE investors. It is a growing and stable source of Medicare revenue, with spending averaging $17.6 billion a year from 2016 to 2021, according to CMS.
Private equity ownership of health care providers has become a hot-button issue, particularly in light of situations such as the bankruptcy of hospital system Steward Health Care. Recent congressional hearings, reports and proposed legislation have sought to place parameters around PE investment in health care and require greater transparency from PE owners.
The post What Home Health Metrics Tend to Excel – and Lag – Under Private Equity Owners appeared first on Home Health Care News.
