State Medicaid Expansion Adoption and Private Equity Acquisitions

• In Event: Lightning Session: Health Policy & Natural Resource, Energy, and Environmental Policy

Abstract

There are rising concerns over how private equity acquisitions of US hospitals and physician practices affect health care access, affordability and quality. Recent work has indicated that private equity acquisitions are associated with higher hospital charges, worsened quality of care, and potential shifts in patient mix towards patients with private insurance that provide higher reimbursement rates than patients with public insurance. These strategic patient mix shifts are critical to note as they may act to further exasperate well documented access disparities for patients, particularly for those with Medicaid coverage, which tends to provide the lowest reimbursement rates to providers. While some have raised policy calls for increasing the reimbursement rates of public payers, little is known about whether alternative policies levers can aid in the stabilization of financially distress hospitals, and in turn, reduce their potential risk of being acquired by private equity groups. In this study, we draw on rich data on private equity hospital acquisitions (between 2005 and 2023) to study how state Medicaid expansion adoptions affect hospitals’ risk of being acquired by private equity groups. Preliminary difference in difference results, which draw on methods that are robust to potential heterogenous treatment effects, suggest that state Medicaid expansion adoption is associated with a significant, and economically meaningful, decrease in hospitals’ risk of being acquired by private equity groups. Sources of potential policy effect heterogeneities across different types of hospitals, with different levels of financial vulnerabilities, are also explored.  

Author

• Sebastian Linde, Texas A&M University
  Presenting Author