In this article, a year-long bipartisan Congressional investigation into two private equity-backed U.S. hospital systems revealed that patient care declined at both facilities while their private equity owners profited significantly from their investments. The investigation, led by Senators Sheldon Whitehouse and Charles E. Grassley, focused on Apollo Global Management, the owner of Lifepoint Healthcare, and Leonard Green & Partners, which owned hospitals under Prospect Medical Holdings.
Private equity firms like Apollo and Leonard Green have invested over $1 trillion in healthcare businesses over the past decade, burdening acquired companies with debt and cutting costs to boost earnings. The Senate investigation aimed to assess the profits private equity firms made from these investments and whether patient care was compromised.
The findings indicated that private equity investors prioritized profits over patients, resulting in health and safety violations, understaffing, and hospital closures. Academic studies have shown that private equity involvement in healthcare leads to increased costs for patients and lower quality of care. Senate investigators discovered that private equity owners of Prospect Medical Holdings prioritized issuing new debt and paying dividends to themselves over investing in hospital operations to benefit patients.
The investigation also highlighted instances of underinvestment and neglect at facilities owned by private equity firms, such as Ottumwa Regional Health Center. Despite financial gains for the owners, patient care suffered, as evidenced by incidents like sexual assaults on patients. The report emphasized the importance of accountability in hospital financial structures to prioritize patient needs.
Both Prospect Medical Holdings and Apollo disputed the report’s conclusions, citing positive contributions to communities and investments in hospital improvements. They defended their commitment to quality care and patient safety, despite the Senate report’s criticisms. The impact of private equity ownership on hospital operations was evident in employee dissatisfaction and concerns about financial oversight.
The Senate report prompted further investigations into hospital practices, such as the case of Memorial Medical Center in Las Cruces, NM, where cancer patients were reportedly turned away. The facility’s former chief executive resigned following the allegations, and investigations were launched to address concerns raised by the report.
