In February we stayed out of the cold and bundled up with the latest in health policy research. We read about salary and utilization changes in hospitals acquired by private equity, challenges with price transparency requirements, and changes to hospital community benefit rules in Oregon.

Variation In Hospital Salary Expenditures And Utilization Changes After Private Equity Acquisition, 2005-19

Sneha Kannan and Zirui Song. Health Affairs. February 2025. Available here.

Researchers for University of Pittsburgh and Harvard University looked at data from the 2005-2019 Medicare hospital cost reports to compare 242 US hospitals acquired by private equity (PE) firms with 870 matched control hospitals not acquired by PE firms to determine differences in salary expenditures associated with acquisition. 

What it Finds

• PE firms used different strategies to generate returns with most focusing on cost-cutting through significant reductions in salary expenditures, while a few firms emphasized increasing revenue by raising charges to commercial payers, without cutting staffing.
• Hospitals acquired by PE firms generally experienced reductions in staffing, reflected by cuts in salary expenditures, which correspond to decreased service utilization. This reduction in capacity could compromise the hospital’s ability to deliver care, contributing to poorer patient outcomes, including increased hospital-acquired adverse events.
• There was a variation in the impact of salary cuts across departments. Some PE firms focused more on reducing staffing in high-cost, labor-intensive areas like operating rooms and outpatient clinics, while others maintained higher staffing levels in certain departments like obstetrics. 

Why it Matters

These findings are important because they highlight the variability in how private equity (PE) firms manage acquired hospitals, with implications for both financial outcomes and patient care. Understanding that some PE firms focus on cost-cutting through staffing reductions, while others prioritize revenue generation through price increases, provides a more nuanced view of PE’s impact on healthcare. This variation in strategies could explain differences in patient outcomes, such as increased adverse events and decreased service utilization, which may compromise care quality. Policymakers and healthcare providers can use this insight to make informed decisions about regulating and managing the effects of PE acquisitions on hospitals and the communities they serve. 

Challenges with effective price transparency analyses

Gary Claxton, Lynne Cotter, and Shameek Rakshit. Peterson-KFF. February 2025. Available here.

In this brief, researchers for Peterson-KFF examined the challenges that users may encounter when accessing the price data reported under the federal Transparency in Coverage (TiC) regulations. 

What it Finds

• Many hospitals report prices for services providers do not offer, such as listing prices for procedures like heart surgeries that aren’t performed at the hospital. These “unlikely rates” or “ghost” rates can distort the transparency data and confuse consumers.
• Hospitals and insurers report different prices for the same services based on factors like the payer, insurance type, or whether the service is in-network. For example, an MRI at the same facility(?) may cost significantly different amounts for patients with different insurance plans, leading to complications in comparing costs across different providers. 
• There is no uniform method for reporting prices across hospitals or insurers, and these methods can change over time. Some hospitals combine charges for various services into one lump sum, while others separate them, making it difficult for patients to understand the full cost or compare prices across institutions. 

Why it Matters

In February, President Trump issued an Executive Order calling for improvements to the TiC and hospital price transparency data. The findings in the Peterson-KFF report are consistent with other reports concluding that the TiC rules, which have cost insurers and plans an estimated $3 billion to implement, are not meeting the desired policy goals. With improvements, these data can be a critical source of information for researchers, policymakers, and regulators to identify cost drivers in the health care system and effectively target, develop, implement, and monitor potential policy solutions.

Oregon Community Benefit Reform Influenced Not-For-Profit Hospitals’ Charity Care And Medical Debt Write-Off

Tatiane Santos, Richard C. Lindrooth, Shoou-Yih Daniel Lee, Kelsey Owsley and Gary J. Young. Health Affairs. February 2025. Available here.

Researchers for Health Affairs examined charity care spending and rates of medical debt to determine the impact of a new Oregon policy on patient financial assistance and bad debt.

What it Finds

• The Oregon community benefit policy led to higher charity care spending in some hospitals, particularly those in the middle range of pre-policy charity care spending. However, hospitals also incurred more bad debt, likely due to expanded medical debt protections, which are a key aspect of the policy.
• The policy’s medical debt protections, which restrict hospitals from referring unpaid bills to collections before assessing financial assistance eligibility, led to an increase in bad debt write-offs. This suggests that the protections reduced aggressive billing and collections practices, helping patients avoid financial hardship. 
• While the policy increased charity care spending and improved medical debt protections, there were implementation challenges. Hospitals, particularly smaller ones, struggled with the administrative burden of meeting the expanded patient financial assistance requirements, which may have limited the overall impact on charity care.

Why it Matters

These findings are significant because they demonstrate how policy interventions, such as Oregon’s community benefit requirements, can enhance patient access to financial assistance and mitigate the burden of medical debt, particularly for economically disadvantaged populations. The increase in charity care and reduction in aggressive billing practices reflect the potential for such policies to alleviate financial hardship and improve healthcare equity. However, the challenges associated with policy implementation highlight the need for clearer guidelines and more robust enforcement mechanisms to ensure that hospitals fulfill their community benefit obligations. These results have broader implications for the design and effectiveness of healthcare policies aimed at protecting vulnerable patients and promoting accountability within the healthcare system.