A year-long bipartisan Congressional investigation into two personal equity-backed U.S. hospital methods discovered that affected person care deteriorated at each operations as their personal fairness house owners reaped vital payouts on their investments within the methods. The findings strengthened tutorial analysis exhibiting how personal fairness healthcare investments hurt sufferers whereas enriching buyers.
The investigation was helmed by two senators who lead the Senate Budget Committee — Sheldon Whitehouse, a Rhode Island Democrat and Charles E. Grassley, an Iowa Republican.
The inquiry centered on personal fairness big Apollo Global Management, proprietor of Lifepoint Healthcare, the nation’s largest operator of rural hospitals, and Leonard Green & Partners, a non-public fairness agency in Los Angeles that owned hospitals beneath the Prospect Medical Holdings umbrella from 2010 to 2021.
Over the previous decade, private-equity firms like Apollo and Leonard Green have spent greater than $1 trillion shopping for well being care companies, together with hospitals, nursing houses, doctor practices and hospital staffing companies. To finance these offers, personal fairness house owners usually burden the businesses they purchase with debt, then slash firm prices to extend earnings and enchantment to potential patrons in subsequent years. Because personal fairness corporations don’t make public the monetary outcomes of the businesses they personal, Senate investigators aimed to evaluate how a lot revenue the personal fairness corporations generated from their investments within the hospitals and whether or not the offers harmed sufferers.
“As our investigation revealed, these monetary entities are placing their very own income over sufferers, resulting in well being and security violations, persistent understaffing, and hospital closures,” Whitehouse stated in an announcement. “Private fairness buyers have pocketed hundreds of thousands whereas driving hospitals into the bottom after which promoting them off, leaving cities and communities to choose up the items.”
Academic studies show that non-public fairness corporations’ involvement in healthcare is related to vital price will increase for sufferers and payers, resembling Medicare. A decrease high quality of care can be related to personal fairness corporations’ investments in healthcare. Patients receiving care at hospitals owned by personal fairness corporations additionally skilled extra bloodstream and surgical website infections and fell extra usually, a 2023 study by academics at Harvard University and the University of Chicago discovered.
Adding to this analysis, the Senate investigation discovered that each time Prospect Medical amenities confirmed monetary enhancements over the interval of personal fairness possession, slightly than investing in hospital operations to profit sufferers, the house owners induced the corporate to situation new debt, utilizing proceeds to pay dividends to themselves.
For instance, the investigation discovered that Prospect Medical Holdings paid out $645 million in dividends and most popular inventory redemption to its buyers — $424 million of which went to Leonard Green buyers — and took out a whole lot of hundreds of thousands in loans that it will definitely defaulted on.
Likewise, the Senate investigation discovered that Apollo Global Management underinvested in Ottumwa Regional Health Center, a Lifepoint facility in rural Iowa that the inquiry scrutinized.
At that facility, a male nurse was discovered to have sexually assaulted a number of incapacitated feminine sufferers earlier than dying of a drug overdose in Oct. 2022. Senate investigators concluded that, “this occasion could have occurred due to unfulfilled guarantees and underinvestment, which eroded the hospital’s tradition of security.”
While the hospital declined, Apollo acquired hundreds of thousands of {dollars} a yr, the report stated.
“A reliable well being care system is crucial to the vitality of a group,” Grassley stated in an announcement. “As at all times, sunshine is the most effective disinfectant. This report is a step towards making certain accountability, in order that hospitals’ monetary buildings can finest serve sufferers’ medical wants.”
Prospect stated it was nonetheless reviewing the Senate report and was upset by “its false conclusions and obvious omissions of key details.”
“The Committee’s report appears to not acknowledge our many optimistic contributions to the communities we serve or to precisely replicate the concentrate on high quality of care and affected person security at our hospitals,” Prospect added. “The Committee drew basic conclusions concerning the high quality of care at our hospitals with out ever reviewing data from these hospitals, which is the place the concentrate on care takes place, slightly than on the company stage.”
In addition, the corporate stated, “Nearly all of the hospitals Prospect acquired have been cash-starved, uncared for, in disrepair and on the verge of closure or chapter. In practically each occasion, nobody else needed to accumulate them, and lots of have been headed to closure. Prospect invested greater than $750 million in its hospitals and offered greater than $900 million in charity and uncompensated care to sufferers. That is the precise reverse of placing income above sufferers.”
A spokesman for Apollo disputed the report’s findings as properly. “Apollo Funds have invested billions of {dollars} in Lifepoint and its predecessor corporations, which has been used to enhance amenities, broaden native healthcare providers, recruit care suppliers, construct new facilities of care and improve expertise throughout Lifepoint’s community,” the spokesperson stated. “Apollo Funds proceed to help Lifepoint administration’s emphasis on steady enhancements in high quality of care, together with at Ottumwa Regional Health Center.”
“As a results of these investments, high quality of care at Lifepoint hospitals has improved, in accordance with third social gathering rankings like Leapfrog in addition to CMS Star Ratings,” the spokesperson added. “At a time when many rural hospitals are beneath stress and vulnerable to closing, Lifepoint has not needed to shut a single hospital and is dedicated to offering important providers in underserved areas.”
Representatives from Lifepoint Health and Leonard Green & Partners didn’t instantly reply to requests for remark.
The Senate report additionally exhibits the influence that the hospitals’ personal fairness house owners had over the entities’ operations. A June 2022 worker satisfaction survey from Ottumwa cited within the report acknowledged, “As far as our hospital being a part of Lifepoint, it appears like we’re a quantity, a finances, something however a care giving establishment.”
After Prospect put in a administration audit committee of the board to supervise monetary operations, board paperwork indicated among the committee’s members “had felt pressured to maintain sure issues quiet,” the report stated.
The legal professional basic in New Mexico, Raul Torrez, launched an investigation of a Lifepoint-run facility in Las Cruces, NM—Memorial Medical Center—after NBC News reported last year that the power had turned away a dozen most cancers sufferers. The former chief govt of the power resigned shortly after the report.
Memorial’s chief monetary officer stated on the time that the hospital didn’t flip away sufferers and Lifepoint stated, “most of the assertions being made about Memorial’s practices, conduct and communications with sufferers are factually inaccurate.”
Neither Memorial nor Lifepoint would establish particular inaccuracies or talk about the experiences of the sufferers, which have been shared with the hospital. Hospital officers known as a few of them to apologize after they instructed NBC News their story.
