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A new yearlong Senate investigation has concluded that private equity (PE)-backed hospitals prioritized investment payouts over patient care.
For those who have been paying attention, this may not come as a surprise. A November JAMA study found that while the number of for-profit hospice facilities is growing, care quality at not-for-profit centers is better. And a July JAMA research letter showed PE-owned hospitals saw a 24% drop in assets between 2010 and 2019.
Led by Senators Sheldon Whitehouse (D-RI) and Chuck Grassley (R-IA), the report focused on PE firms Apollo Global Management, which owns rural hospital operator, Tennessee-based Lifepoint Healthcare, and Leonard Green & Partners (LGP), which held a majority stake in the California-based Prospect Medical Holdings (PMH) between 2010 and 2021.
The deets. According to the investigation, PE companies now manage assets totaling $13 trillion globally, up from $1 trillion in 2004, and have spent more than $1 trillion acquiring various healthcare institutions through the 2010s.
The documents the Senate Budget Committee reviewed indicated that the facilities purchased by PE firms “experienced health and safety violations, understaffing, reduced quality of patient care, and closures,” per a statement from Grassley’s office.
For instance, the Iowa senator pointed to the state’s for-profit Ottumwa Regional Health Center (ORHC), where wait times have allegedly increased as patient care has decreased, he said in the statement.
ORHC was initially acquired in 2010 by PE-owned hospital operator RegionalCare, which was later acquired by Apollo. The center’s PE owners didn’t deliver on seven promises related to growth, recruitment, patient satisfaction, and more, according to the report. Despite this, Apollo reportedly made “millions” each year off its Lifepoint and ORHC properties.
“Apollo Funds have invested billions of dollars in Lifepoint and its predecessor companies, which has been used to improve facilities, expand local healthcare services, recruit care providers, build new centers of care, and upgrade technology across Lifepoint’s network,” an Apollo spokesperson told NBC. “Apollo Funds continue to support Lifepoint management’s emphasis on continuous improvements in quality of care, including at Ottumwa Regional Health Center.”
But rather than utilizing financial gains to invest in hospital operations, the report said PMH accrued more than $3 billion in unpaid loan debt while LGP investors pocketed $424 million of $645 million in dividends and preferred stock redemption. PMH defaulted on the loans in late 2022, closed two hospitals that same year, and had to provide equity in a business segment for delinquent rent after LGP pulled out of the investment.
An LGP spokesperson told CBS News PMH was “in strong financial condition with access to over $500 million to support its operations,” denying that the organization was struggling when it exited.
“As our investigation revealed, these financial entities are putting their own profits over patients, leading to health and safety violations, chronic understaffing, and hospital closures,” Whitehouse said in a statement.