Two personal fairness companies’ efforts to wring income out of hospitals in underserved communities put sufferers at risk, in accordance with a new report launched Tuesday by a robust Senate committee.
The 162-page report by the Senate Budget Committee comes as Americans continue to express outrage over the role of corporations within the U.S. healthcare system, following the December killing of the CEO of the nation’s largest well being insurer. And its findings add to a refrain of lawmakers attempting to handle the detrimental affect of personal fairness possession on important U.S. hospitals — a topic that has been the main target of a two-year CBS News investigation.
“Private fairness has contaminated our well being care system, placing sufferers, communities, and suppliers in danger,” stated Sen. Sheldon Whitehouse, a Democrat from Rhode Island who led the investigation with Sen. Chuck Grassley, a Republican from Iowa.
“As our investigation revealed, these monetary entities are placing their very own income over sufferers, resulting in well being and security violations, power understaffing, and hospital closures,” Whitehouse stated.
In September, one other Senate committee took the extraordinary step of voting to hold Ralph de la Torre, the CEO of Steward Healthcare, in contempt of Congress when he refused to seem after receiving a subpoena. CBS News has documented how he and personal fairness traders extracted a whole lot of thousands and thousands of {dollars} from the corporate previous to it declaring bankruptcy last May.
The Senate’s newest investigation unearthed 1000’s of paperwork detailing the monetary maneuvers of two personal fairness companies: Leonard Green & Partners and Apollo Global Management. Investigators concluded that the personal fairness’s monetary mannequin might pose “a menace to the nation’s well being care infrastructure, significantly in underserved and rural areas.”
“In the course of its investigation, this Committee obtained over one million pages of recent paperwork that shine gentle on the enterprise dealings of those PE-owned hospital operators and underscored issues concerning the detrimental results of PE possession on hospitals and their sufferers nationwide,” Senate investigators wrote, noting their findings ought to function a roadmap for reform.
A spokesperson for Leonard Green didn’t instantly present remark. An Apollo spokesperson stated the corporate is declining remark till it is had an opportunity to assessment the Senate report and assess its findings.
Accusations of monetary mismanagement
In 2010, Leonard Green & Partners acquired a California-based hospital firm known as Prospect Medical Holdings. As executives at Leonard Green and management at Prospect Medical sought to drive income, the Senate committee documented what it stated was “overwhelming proof of monetary mismanagement” that has led hospitals in 5 states to chop companies or shut altogether.
Prospect Medical hospitals which have shut down include Delaware County Memorial in suburban Philadelphia, which closed in 2022, a yr after Leonard Green shed its stake in Prospect Medical.
CBS News
The report famous that very same yr, Prospect Medical CEO Sam Lee “invested closely” on upgrades to his property in Aspen, Colorado, certainly one of two houses he owns price a mixed $20 million, in accordance with data obtained by Senate investigators.
Investigators stated in addition they obtained paperwork that confirmed Leonard Green “exercised vital management” over Prospect Medical’s funds and operations.
In addition to holding a majority of seats on Prospect Medical’s board, executives at Leonard Green granted inventory choices to officers at Prospect Medical for reaching monetary targets, however didn’t present comparable incentives for “enhancements to affected person high quality and security,” the report famous.
Meanwhile, Prospect Medical issued a whole lot of thousands and thousands of {dollars} in dividends to its management, together with a $457 million payout in 2018. CBS News previously reported Lee took dwelling about $90 million whereas Leonard Green shareholders have been paid a complete of about $275 million, funds that depleted the corporate’s money reserves, in accordance with Senate investigators.
“By 2019, the corporate confronted $2.8 billion in liabilities, underperforming hospitals and the collapse of important healthcare companies within the communities it served,” Senate investigators wrote.
The firm instructed the Senate Budget Committee that it rejected any implication that Prospect Medical was operated in a financially irresponsible trend, or that Leonard Green “has put their monetary pursuits forward of the pursuits of the hospital system and the communities they serve.”
A Leonard Green spokesperson beforehand instructed CBS News a dozen hospitals in underserved communities have been saved or rehabilitated throughout its partnership with Prospect Medical.
“In the final three years’ of Leonard Green’s funding alone, over $200 million was invested to enhance and broaden hospital operations,” the spokesperson stated.
In a press release, a Prospect Medical spokesperson stated the report drew false conclusions and omitted key info.
“The Committee drew normal conclusions concerning the high quality of care at our hospitals with out ever reviewing data from these hospitals, which is the place the give attention to care takes place, slightly than on the company stage,” the spokesperson wrote in a press release, noting the corporate has invested greater than $750 million in its hospitals and supplied greater than $900 million in charity and uncompensated care to sufferers.
“Nearly all of the hospitals Prospect acquired have been cash-starved, uncared for, in disrepair and on the verge of closure or chapter,” the spokesperson wrote. “In practically each occasion, nobody else wished to amass them, and lots of have been headed to closure.”
Pennsylvania lately moved to take management of Prospect Medical’s hospitals within the state to forestall the corporate from additional shutting down companies. In a lawsuit filed in November, the state’s legal professional normal alleged years of the corporate’s mismanagement and neglect have left a whole lot of 1000’s of Pennsylvanians with out care.
And issues at Prospect Medical’s hospitals have persevered. The day after Christmas, a water predominant break at one other suburban Philadelphia facility caused a flood, and then a fire, that pressured the evacuation of 38 sufferers.
“Unfilled guarantees and underinvestment”
The Senate report additionally traced what investigators known as “unfilled guarantees and underinvestment” at Ottumwa Regional Health Center, at a facility in rural Iowa operated by a hospital firm owned by Apollo Capital Management.
Among their most alarming findings, investigators say “monetary elements” might have contributed to the continued employment of a male nurse who sexually assaulted at least nine female patients whereas they have been sedated, earlier than he died of a drug overdose.
“It was uncovered that workers have been involved about [the nurse’s] conduct earlier than his demise and escalated no less than a few of these issues, however no substantive actions have been taken in response,” wrote the Senate investigators, citing the price of changing a nurse and the shortage of sufficient staffing.
“The Ottumwa neighborhood has personally felt the affect of personal fairness on their well being care system,” stated Grassley. “The diminishing high quality of care, service availability and care capability on the hospital is forcing Ottumwa residents to journey vital distances in an effort to obtain acceptable therapy.”
According to the report, Apollo instructed the committee that rural hospitals “have confronted challenges for many years, partially pushed by underinvestment,” and that it deliberate to do “the alternative by investing in and supporting corporations” just like the one which operates Ottumwa.
Yet, the committee stated its findings mirrored continued underinvestment. The report alleges Apollo and its companions failed to fulfill sure legally binding commitments since they acquired the hospital in 2015, together with sustaining entry to companies, establishing and implementing an outpatient substance abuse therapy program, and persevering with its charity care obligations.
“Regardless of the challenges in operating rural hospitals, Apollo has profited immensely from its possession of the portfolio of hospitals that incorporates [Ottumwa], whereas failing to make
dedicated and essential investments at [Ottumwa],” the Senate investigators wrote, noting the hospital was certainly one of about 220 U.S. hospitals operated by hospital corporations owned by Apollo.
