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Exploring the boom in corporate investor relations between acute and post acute care (Volume 10, Issue 27)

The Stark Law prevents physicians from referring patients to facilities where they have an ownership stake. What happens, though, when the investors behind a hospital also own the post acute care facility to which it refers? Is the transition more efficient? More amenable to novel payment structures? A new article in Health Affairs starts to answer this question from square one: what are the common investor ownership relationships between acute care hospitals, post acute care facilities, and hospice agencies?

Mike Mozart (Flickr/CC)

Their work was not easy. The authors used the CMS Provider Enrollment, Chain, and Ownership System (PECOS) database to identify corporate investor owners of acute care hospitals, post acute care facilities, and hospice agencies, meticulously matching the records between databases. To work past data limitations, they used number of investments as a proxy for investor size, only focused on one investor per provider, and filled in missing records within PECOS. The end result was an unprecedented sketch of ownership structures nationwide.

The authors found that 48.9% of hospitals have at least one cross-sector common ownership linkage to the hospice or post acute care sector. That number has risen from 24.6% in 2005. The largest segment of that is hospitals with ownership relations to home health agencies, at 32.9%, followed by hospice (23.3%) and skilled nursing facilities (17.5%). Further, when they examined the dynamics of the market between 2005 and 2015, they found that the majority of new linkages were of existing post acute care owners adding hospital ownership; existing integrated systems increasingly may be acquiring hospitals. The proportion of beneficiaries served by agencies with hospital linkages is increasing, but it is unknown whether patients are increasingly moving between these connected facilities.

On the whole, the authors unearthed a significant corporate investment network but cannot yet determine its effects. Are these linkages improving patient handoffs, spurring earlier hospice referrals, or simply decreasing market competition? Are they a response to ACO and bundled payment demands? Are they having an effect at all? The authors have yet to delve into these questions, but evidence-based policy makers should look for further findings from this database.

Commentary by Hannah Abrams


The sharing of investors across firms is a new antitrust focus because of its potential negative effects on competition. Historically, the ability to track common investors across the continuum of health care providers has been limited. Thus, little is known about common investor ownership structures that might exist across health care delivery systems and how these linkages have evolved over time. We used data from the Provider Enrollment, Chain, and Ownership System of the Centers for Medicare and Medicaid Services to identify common investor ownership linkages across the acute care, postacute care, and hospice sectors within the same geographic markets. To our knowledge, this study provides the first description of common investor ownership trends in these sectors. We found that the percentage of acute care hospitals having common investor ties to the postacute or hospice sectors increased from 24.6 percent in 2005 to 48.9 percent in 2015. These changes have important implications for antitrust, payment, and regulatory policies.

PMID: 28874480

Fowler, AC, et al. Health Affairs. 2017; 36 (9): 1547-1555.

Hannah Abrams
About Hannah Abrams

Hannah Abrams is a second year medical student at Baylor College of Medicine. Follow her on Twitter @HannahRAbrams. Contact: Twitter | More Posts