In the last twenty years, private equity firms have greatly increased their ownership stake in diverse sectors of the healthcare industry, including hospitals. Between 2010 and 2020, these firms contributed over $700 billion to US healthcare, solidifying it as private equity’s second-highest target industry. Despite this, the effect of private equity acquisitions on Medicaid recipients and maternal health outcomes is not widely studied. Patients with Medicaid are particularly vulnerable to these changes because they often have higher complexity in the social and clinical sense. And in 2021, Medicaid financed around 41% of US births.
In her paper “The Impact of Private Equity Hospital Acquisitions on Maternal Health for Medicaid Patients,” Amy Jiao adds additional understanding to this demographic. Dr. Jiao draws data on national claims in the years 2011 through 2020, which is sourced from the Transformed Medicaid Statistical Information System Analytic Files and CMS Medicaid Analytic eXtract. She then uses this data to approximate “the impact of [private equity] ownership of hospitals on maternal health outcomes of Medicaid enrollees.” Using a generalized difference-in-differences framework, Dr. Jiao compares “two sets of outcomes in PE-acquired hospitals and matched control hospitals: (1) patient volume and patient selection, and (2) process and quality of care.” Dr. Jiao finds a 12% drop in the “Medicaid obstetric service market share” in relation to private equity acquisition. For states with “low Medicaid-to-commercial relative prices,” this drop increases to 16%. Conversely, these acquisitions were not correlated to shifts in “patient selection” and “the process and quality of care for labor and delivery services for the Medicaid population,” including patient mix, several maternal morbidity (SMM), intensity of treatment, and low-risk C-sections.
Overall, this research is novel in its leveraging of data from national Medicaid claims to examine these issues. The paper offers important implications, including how state Medicaid agencies could address the observed decline in Medicaid market shares in private equity owned hospitals. And by highlighting Medicaid users, Dr. Jiao adds to the literature on health policy and private equity.
