Senate report slams private equity’s ownership of hospitals

 Senate report slams private equity’s ownership of hospitals


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A bipartisan Senate report on private equity ownership of two health systems shows the result of PE investment puts a priority of profit over patient health and hospitals finances.

A yearlong investigation found that patient care deteriorated at both systems while private equity owners received millions, according to the Senate Budget Committee bipartisan staff report, “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System.” 

The investigation was led by Senate Budget Committee Chairman Sheldon Whitehouse (D-RI) and Ranking Member Sen. Charles E. Grassley, (R-IA).

WHY THIS MATTERS

The report centered on hospitals Ottumwa Regional Health Center in Iowa and LifePoint Health in Tennessee.

Private equity company Apollo Global Management owns LifePoint Healthcare.

The investigation expanded to include other entities, including PE firm Leonard Green & Partners and hospital operator Prospect Medical Holdings, in which Leonard Green & Partners held a majority stake.

Leonard Green & Partners (LGP) is a private equity firm in Los Angeles that owns hospitals under the Prospect Medical Holdings (PMH).

“LGP and PMH’s primary focus was on financial goals rather than quality of care at their hospitals, leading to multiple health and safety violations as well as understaffing and the closure of several hospitals,” the report said.

THE LARGER TREND

PE and other private funds had less than $1 trillion in managed assets in 2004, but now manage more than $13 trillion globally, according to the report. PE firms create affiliated funds with money raised from investors, such as pension funds, foundations and insurance companies. The intention is generating returns for their investors within a short period of time.

PE has grown in healthcare also. In the 2010s investors spent more than $1 trillion. By 2021 PE investment reached an all time high of 515 deals valued at $151 billion.

ON THE RECORD

“Recent peer reviewed studies have generally found negative consequences for general acute care hospitals during the first three years of PE ownership as compared to non-PE owned hospitals, including lower quality of care, increased transfers to other hospitals, decreased staffing and higher prices,” the report said.
 



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Fallon Wolken

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