January 9, 2025

up to a year bipartisan congressional inquiry An investigation into two private equity-backed U.S. hospital systems found that patient care deteriorated at both institutions as private equity owners reaped huge returns on their investments in the systems. The findings reinforce academic research showing how private equity health care investments harm patients while enriching investors.

The investigation is being led by the two senators who lead the Senate Budget Committee — Democrat Sheldon Whitehouse of Rhode Island and Republican Charles E. Grassley of Iowa.

Investigation focuses on private equity giants Apollo Global Management, Inc., The owner of Lifepoint Healthcare, the largest rural hospital operator in the United States, and Los Angeles private equity firm Leonard Green & Partners, which owned hospitals under Prospect Medical Holdings from 2010 to 2021.

In the past ten years, private equity firm Companies like Apollo and Leonard Green have spent more than $1 trillion buying health care businesses, including hospitals, nursing homes, doctors’ offices and hospital staffing company. To fund these deals, private equity owners often take on debt loads for the companies they acquire, then cut costs on the companies to increase earnings and attract potential buyers in subsequent years. Because private equity firms do not disclose the financial results of the companies they own, Senate investigators aim to assess how much profit private equity firms make from hospital investments and whether the deals harm patients.

“As our investigation shows, these financial entities put their own profits ahead of patients, resulting in health and safety violations, chronic staffing shortages and hospital closures,” the White House said in a statement. “Private equity investors will The hospital was razed and then sold, pocketing millions of dollars and leaving towns and communities to pick up the pieces.”

academic research shows Private equity firms’ involvement in health care has been associated with significant increases in costs for patients and payers (e.g., Medicare). Lower quality of care is also associated with investments by private equity firms in health care. Patients who received care at private equity-owned hospitals also experienced more bloodstream and surgical site infections and fell more frequently, 2023 Scholars Research Found by Harvard University and the University of Chicago.

In addition to that study, a Senate investigation found that whenever Prospect Medical showed an improvement in its financial condition during its private equity ownership period, the owners induced the company to issue new debt, using the proceeds to pay dividends rather than invest. Operate in the hospital to benefit patients.

For example, the investigation found that Prospect Medical Holdings paid $645 million in dividends and preferred stock redemptions to its investors ($424 million of which went to Leonard Green investors) and drew down hundreds of millions of dollars in loans that ultimately defaulted.

Likewise, Senate inquiry finds Apollo Global Management underinvested in Ottumwa region The health center is a life-point facility in rural Iowa that the investigation scrutinized.

In October 2022, the agency discovered that a male nurse sexually assaulted multiple incapacitated female patients and then died of an overdose. The hospital’s reputation has been eroded by unfulfilled promises and underinvestment.” Safety Culture”.

Despite the hospital’s decline, Apollo still received millions of dollars each year, the report said.

“A reliable health care system is critical to the vitality of our communities,” Grassley said in a statement. “As always, sunshine is the best disinfectant. This report is a step toward ensuring accountability so that hospitals Financial structure best meets patient’s medical needs.”

Prospect said it was still reviewing the Senate report and was disappointed by “its erroneous conclusions and glaring omission of key facts.”

“The committee’s report does not appear to acknowledge the many positive contributions we make to the communities we serve, nor does it accurately reflect our hospital’s focus on quality of care and patient safety,” Prospect added. “The committee made general conclusions about the quality of care in our hospitals without reviewing information from those hospitals, where care is focused rather than at the corporate level.”

Additionally, the company said, “Nearly all of the hospitals Prospect acquired were cash-strapped, neglected, in disrepair, and on the verge of closing or bankruptcy. In almost all cases, no one else wanted to acquire them, and many hospitals went Prospect has invested more than $750 million in its hospitals and provided more than $900 million in charity and pro bono care to patients, the exact opposite of putting profits over patients.

An Apollo spokesman also disputed the report’s findings. “Apollo Funds has invested billions of dollars in Lifepoint and its predecessor companies to improve facilities, expand local medical services, recruit caregivers, build new care centers and upgrade technology across the Lifepoint network,” a spokesperson said. “The Apollo Fund continues to support Lifepoint management’s focus on continually improving the quality of care, including at Ottumwa Regional Health Centre.”

“The quality of care at Lifepoint hospitals has improved as a result of these investments, according to third-party ratings such as Leapfrog and CMS Star Ratings,” the spokesperson added. “At a time when many rural hospitals are under pressure and at risk of closure, Lifepoint has not closed any A hospital dedicated to providing critical services in underserved areas.”

Representatives for Lifepoint Health and Leonard Green & Partners did not immediately respond to requests for comment.

The Senate report also shows the influence of hospital private equity owners on the entity’s operations. “In terms of our hospital being part of Lifepoint, it feels like we’re just a number, a budget, not a care facility at all,” the report cites a June 2022 Ottumwa employee satisfaction survey.

After Prospect established a board management audit committee to oversee financial operations, board documents showed that some members of the committee “felt pressure to keep certain matters confidential,” the report said.

New Mexico Attorney General Raul Torrez launched an investigation into Lifepoint’s operating facility (Memorial Medical Center) in Las Cruces, New Mexico. NBC News reported last year The agency turned away more than a dozen cancer patients. The agency’s former chief executive resigned shortly after the report was released.

Memorial’s chief financial officer said at the time that the hospital was not turning away patients, and Lifepoint said that “many of the claims made about Memorial’s practices, conduct and communications with patients are factually inaccurate.”

Neither Memorial nor Lifepoint will identify specific errors or discuss patient experiences shared with hospitals. After they told their stories to NBC News, hospital officials called some of them to apologize.

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