Becker's Hospital Review

14 CEO / STRATEGY 'The current model doesn't work': Illinois hospital CEO on private equity hospital acquisition By Madeline Ashley A s more hospitals continue to be picked up by private equity firms, recent studies have tied these acquisitions to adverse patient outcomes. "I'm concerned by rural hospitals that are scooped up by anyone that threatens their independence and their ability to continue to treat their patients in a meaningful way," David Schreiner, PhD, president and CEO of Dixon, Ill.- based Katherine Shaw Bethea Hospital, told Becker's. KSB is an 80-bed independent hospital with 950 employees. The hospital also has a family medicine residency program with the University of Illinois. "The thing that I think of is that healthcare is best provided locally," Dr. Schreiner said. "In many times, the rural hospitals are the economic driver in the communities that we live in. I think that allows us to tailor to patients both broadly and individually. And that's more difficult to do when you have absentee owners." Dr. Schreiner said that while quality of care is important, one positive aspect that comes from private equity firm hospital acquisitions is access to capital. "That's something that I know for our organization and many rural hospitals since the pandemic began. We've had a very difficult time capitalizing and that leads to lack of new equipment and even improvement to our existing facilities. PE can help with that," he said. In early December, Sen. Chuck Grassley of Iowa and Sen. Sheldon Whitehouse of Rhode Island, ranking member and chair of the Senate Budget Committee, launched an investigation together into the effects of private equity hospital ownership. The senators argue that many hospitals have experienced reduced care quality and workforce cuts under private equity ownership. Even though rural hospitals are under financial duress, Dr. Schreiner said personal attention is more present than in other places run by larger organizations. "Several of the business office functions are taken out of the community. I think that also impacts healing, because part of the entire patient experience starts when they decide to see a caregiver, and it ends with the billing process. If they don't have the ability to call and have personal touch from someone often that lives in their community in rural hospitals, then I think that's not as positive," he said. To combat rural hospitals feeling the pressure to consider being acquired by private equity companies, Dr. Schreiner said there needs to be fundamental reform. "The current model doesn't work. I think throughout the United States, we have to look at how we support our rural hospitals. I think many people think about rural hospitals as critical access hospitals. There are many of us that are the tweeners, so to speak. We're larger than 25 beds and we're smaller than academic medical centers or academic hospitals. The tweeners need to be taken care of and they often get lost in the conversation. I think private equity can make that worse." n "We continue to add people on the regulation side, on the side to try to help us get paid. Really, where we need more people is at the bedside. We need to be able to invest in nurses, in the physicians, in the equipment that helps us take better care of patients. at's why you look at places that are forced to cut services," he said. In 2023, more than 300 rural hospitals were at risk of closure due to financial problems. Dr. Dunkle said that if rural hospitals are forced to close their doors, they could be purchased by bigger systems, which could lead to increased pricing and lower quality of care. "No one knows the local community more than their local hospital. What you have at this local level is you have people taking care of their neighbors. Our patients are the people that your kids go to school with, that you go to church with, that you see at restaurants in the evening. You're taking care of people you're invested with in that community. You lose that when you're managed from hundreds of miles away," he said. To combat the rise in hospital and service closures, Dr. Dunkle said healthcare leaders need to have a more collective voice. "My question is, and when I talk to my peers, how many hospitals have to close? How many hospitals have to cut service? How many people have to travel 50 miles to deliver a baby? How many bad outcomes do we have to have for mothers and children in this country until finally we do something?" Dr. Dunkle said. "We have to do a better job of really getting the story out and drawing attention to how unfair the model is right now." n "No one knows the local community more than their local hospital. What you have at this local level is you have people taking care of their neighbors." — David Dunkle, MD 14

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