Study: Private Equity Takeovers of Hospitals Led to Rise in Patient Deaths

A recent study has exposed a grim reality when private equity investment groups acquire hospitals: an increase in deaths among Medicare emergency department patients.

This latest research reinforces earlier studies documenting worsening patient outcomes in private equity-acquired health facilities, including nursing homes and surgical centers.

Private equity firms continue to invest in health care to generate quick and substantial profits through acquisitions and sales. But increasingly, these investments appear to come at a cost in lower quality of care and an increase in billing fraud to Medicare, Medicaid and TRICARE.

Examples of Patient Harm

The study published in the Annals of Internal Medicine compared 49 private equity-acquired hospitals with 293 non-private equity hospitals, finding that there were seven more deaths per 10,000 patients in those owned by private equity firms.

Researchers also found that private equity acquisition leads to patient harm, including more post-operative complications for common inpatient surgeries and an increase in medical conditions acquired in the hospital, such as bloodstream infections and injuries from falls.

According to the study, private-equity-owned hospitals often impose cost-cutting measures like cutting emergency department salaries and reducing the number of full-time employees. They also transfer more emergency patients out to other hospitals, suggesting a lack of resources and capacity to care for complex cases.

False Claims Act and Private Equity

Private equity firms that own health care providers are also increasingly being named as defendants in False Claims Act cases involving fraud against Medicare, Medicaid and TRICARE.

Since 2013, at least 25 private equity-owned health care organizations have settled False Claims Act and medical billing abuse allegations for a total of $570 million, according to research by the Private Equity Stakeholder Project.

For example, the private equity firm H.I.G. Capital and subsidiary, H.I.G. Growth Partners, along with related defendants, agreed to pay $25 million in fraud and abuse penalties to resolve a case alleging false claims were submitted to Massachusetts’ Medicaid program for mental health services provided by unlicensed, unqualified staff without the required licensed clinical supervision. This was the largest False Claims Act settlement paid by private equity to date.

The Medicare fraud investigation and subsequent legal case were prompted by a whistleblower employee represented by Waters Kraus Paul & Siegel who was fired after she raised concerns about unqualified and inadequately supervised clinicians and allegations of medical billing fraud.

Medical Billing Fraud

Some of the common private-equity-involved medical billing fraud schemes involve health care companies illegally billing Medicare and Medicaid for services that patients either aren’t eligible for, didn’t receive or received from unqualified providers.

Whistleblowers are key to protecting taxpayers and exposing medical billing fraud. They should start by contacting an experienced False Claims Act attorney before taking any action. By law, whistleblowers cannot initiate a False Claims Act case without help from a lawyer.

An attorney with experience with the False Claims Act can also help whistleblowers facing retaliation by their employer. A good whistleblower lawyer will strike a balance between protecting their client and providing sufficient evidence for the government to launch a Medicare fraud investigation and pursue Medicare fraud and abuse penalties.

Standing Up to Fraud Against the Government

At Waters Kraus Paul & Siegel, our Dallas, Texas, whistleblower attorneys have spent over two decades representing individuals who bravely report fraud—from false billing and kickback schemes to government contract abuse. If you’ve witnessed fraud committed against the government, our firm can help you take a stand and protect your rights under the False Claims Act.