Provider Ownership and Indicators of Service Quality: Evidence from Swedish Residential Care Homes

Abstract

The provision of public services by for-profit and non-profit organizations is widespread in OECD countries, but the jury is still out on whether outsourcing has improved service quality. This article seeks to nuance existing debate by bringing to the fore variation in service quality between different types of non-public providers. Building on theories of dimensional publicness and incomplete contracts, we argue that different forms of non-public ownership are associated with varying intensity of incentives for profit maximization, ultimately affecting service quality. Using residential elder care homes in Sweden as our universe of cases, we leverage novel panel data for 2,639 facilities from 2012 to 2019, capturing ownership type of the care home operators, against a set of indicators pertaining to inputs, processes and outcomes. The results suggest that non-public providers with high-powered incentives to make profit, such as those owned by private equity firms and publicly traded companies, perform worse on most of the selected indicators compared to private limited liability companies and nonprofits. Our findings that the intensity of quality-shading incentives is not the same for all non-public providers, have important implications for government contracting and contract management.

Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review

“…The volume of studies that assessed health outcomes (n=4 total, 3 harmful, and 1 beneficial), costs to patients or payers (n=2 harmful), and costs to operators (n=2 harmful) was too small for conclusive interpretation. However, the findings of the 14 studies addressing quality roughly mirrored the proportions in the full sample, with six studies finding harmful impacts,373848496164 one study finding beneficial impacts,47 six studies finding mixed impacts,224050565859 and one study finding neutral impacts 60. In total, 12 studies identified some sort of harmful impact of PE ownership on nursing homes, and seven studies identified beneficial impacts.…”

“…Among studies that showed harmful impacts on quality, Bos and colleague found that PE owned nursing homes had lower employee quality and client recommendation scores compared with other for profit nursing homes, although this study had a critical risk of bias 38. Broms and colleagues61 found lower staffing density, education, and client ratings at PE owned nursing homes compared with various non-profit and private controls, and Patwardhan and colleagues64 had similar findings, wherein PE owned nursing homes were less likely to meet regulatory quality requirements, although both studies also had a serious risk of bias. Harrington and colleagues49 found increased deficiencies and severe deficiencies among PE owned nursing homes, and Bruch and colleagues41 found that PE owned hospitals had lower patient experience scores compared with control hospitals, but both these studies had a serious risk of bias.…”

“…During this stage, 26 further studies were excluded, leaving 55 studies in the final sample (fig 1). Of these studies, 32 evaluated the impacts of PE ownership on at least one category of health outcomes, costs to patients or payers, costs to operators, or quality, or a combination of these factors,2236373839404142434445464748495051525354555657585960616263646566 (table 1, table 2, and table 3) and 38 reported trends or prevalence of PE among healthcare operators (see supplementary material 3) 2136383940414245495355606163646567686970717273747576777879808182838485868788. Fifteen studies in total reported findings for both impacts and trends 36383940414245495355606163…”

“…Five studies considered multiple specialties or general physician groups 2162658588. Among nursing home studies, 14 included nursing homes specifically2237384047484950565758596074 and three included either residential or long term care homes, which tend to provide more daily living and social support 616467…”

“…Moreover, quality effects were often observable in the years directly after an acquisition, suggesting that PE firms may make immediate changes to their acquired organizations. PE ownership was associated with almost exclusively negative impacts on patient satisfaction, daily functioning, and general quality scores2238414850525356586164 (see supplementary material 5). Among studies that found mixed impacts of PE ownership, there were often trade-offs within related quality measures, such as improvements in one domain of patient experience but not in another, increased staffing of lower skilled clinicians with reduced staffing of higher skilled clinicians, or increased availability of appointments for privately insured patients with reduced availability for patients receiving Medicaid 2245545658…”