Changes in hospital financial performance and quality of care after real estate investment trust acquisition: quasi-experimental difference-in-differences study

OBJECTIVE: To evaluate changes in hospital financial performance and patient quality of care after real estate is leased back to a real estate investment trust (REIT) acquired hospital. DESIGN: Quasi-experimental difference-in-differences study. SETTING: Hospital Medicare cost reports, 100% Medicare hospital claims from 2002 to 2021. PARTICIPANTS: 87 REIT acquired hospitals and 337 non-REIT acquired matched controls. MAIN OUTCOME MEASURES: Changes in hospital financial performance (fixed assets, fixed assets (buildings), net patient revenue, operating expenses, full time equivalent (FTE) nurses, employees on payroll (FTE), net income, total margin, operating margin, current ratio (current assets/current liabilities), days cash on hand, bankruptcy, and closure) and quality of care (risk adjusted 30 day mortality and readmission rates for acute myocardial infarction, congestive heart failure, and pneumonia, as well as patient satisfaction). A Cox proportional hazards model was used to estimate the hazard ratio of hospital closure or bankruptcy, and a Holm-Bonferroni method was used to control family-wise error rate and determine statistical significance. RESULTS: Compared with matched controls, REIT acquired hospitals showed a significant decrease in yearly total fixed assets (-31.01%, 95% CI -44.75% to -13.86%; P=0.001) and in fixed assets specific to buildings (-40.81%, -55.53% to -21.23%; P<0.001). All other relative changes in financial and quality measures were non-significant, with the exception of hospital closures or bankruptcy. A significant adjusted hazard ratio was observed for closure or bankruptcy (5.66, 95% CI 2.92 to 10.98; P<0.001). 25% of REIT acquired hospitals closed or filed for bankruptcy compared with 4% of controls. CONCLUSIONS: REIT acquisitions were not associated with changes in most financial or quality of care measures. REIT acquired hospitals were, however, at greater risk of closure and bankruptcy. These findings highlight the need for regulatory oversight of REIT acquisitions of hospitals.