A recent investigation led by the U.S. Senate Committee on the Budget has raised alarm over the deteriorating care in hospitals owned by private equity (PE) firms across the United States. This bipartisan probe, spearheaded by Senators Chuck Grassley and Sheldon Whitehouse, delved into the growing influence of private equity in the healthcare sector, particularly focusing on its impact on the quality of patient care. The report, based on extensive review and analysis of over one million documents, reveals that private equity ownership of healthcare facilities has ballooned, with at least 457 PE-owned hospitals identified by the start of 2024. These include a variety of hospital types such as general acute care, rehabilitation centers, inpatient psychiatric facilities, and long-term acute care hospitals.
The findings from this yearlong investigation paint a concerning picture of the current state of healthcare under private equity management. The committee’s report highlights numerous instances where the pursuit of profit by these firms has led to adverse patient outcomes. Chronic understaffing, multiple health and safety violations, declining quality of care, and even outright closures of hospitals were among the primary issues identified. Notably, the report also indicates that the private equity sector’s concentration of ownership is significant, with just five PE firms controlling nearly 75% of all PE-owned hospitals. Among these, Apollo Global Management Inc. stands out, owning approximately 220 hospitals through its stakes in Lifepoint Health and ScionHealth.
Impact on Patient Care and Hospital Operations
The negative outcomes discovered during the Senate committee’s investigation raise important questions about the priorities of private equity owners in the healthcare sector. The focus on profit maximization appears to have detrimental effects on the quality of care provided to patients. The findings specific to prominent private equity firms illustrate a clear trend: financial gains are often achieved at the expense of critical healthcare services. For example, Apollo Global Management, the largest PE hospital owner, came under scrutiny for its handling of facilities like Lifepoint Health and the Ottumwa Regional Health Center. Senator Grassley noted a significant decline in the quality of patient experience and extended wait times at the Ottumwa Center, resulting in local residents seeking medical care far from their home community.
Further investigation into Leonard Green & Partners L.P.’s ownership of Prospect Medical Holdings Inc. revealed similar patterns. The Senate report detailed how both Leonard Green & Partners and Apollo Global Management siphoned millions from the hospitals they owned. This divestment of critical funds has severely impacted the operations and quality of care in these facilities, undermining the very purpose of healthcare institutions. These practices have also led to the shuttering of hospitals, leaving communities without essential healthcare services.
Calls for Regulation and Future Implications
The Senate committee’s findings underscore a crucial and urgent need to address the ramifications of private equity ownership in the healthcare sector. The evidence suggests that when hospitals are operated primarily for profit, patient care and safety inevitably suffer. While companies like Apollo argue that their investment strategies have led to improvements in healthcare facilities and services, the overarching narrative presented by the Senate report contradicts these claims. It was evident that the health and safety of patients were routinely compromised due to the cost-cutting and profit-enhancing measures adopted by these private equity firms.
In light of these findings, the Senate report recommends a thorough reevaluation of private equity’s role in healthcare, advocating for more stringent regulations to protect patients and communities. The adjustments suggested could include increased transparency in financial dealings, stricter oversight of hospital management practices, and ensuring sufficient staffing levels to meet patient needs. Through these measures, policymakers aim to counteract the deleterious effects observed in PE-owned hospitals and safeguard the quality and accessibility of healthcare.
Conclusion
A recent investigation by the U.S. Senate Committee on the Budget has raised concerns about the declining care in hospitals owned by private equity (PE) firms. Senators Chuck Grassley and Sheldon Whitehouse led this bipartisan probe, which examined the influence of private equity in the healthcare sector, particularly its impact on patient care quality. Through extensive review of over a million documents, the report revealed that private equity ownership of healthcare facilities has surged, with at least 457 PE-owned hospitals identified by early 2024. These hospitals include general acute care, rehabilitation centers, inpatient psychiatric facilities, and long-term acute care hospitals.
The yearlong investigation’s findings are alarming, revealing numerous cases where profit-driven motives have negatively impacted patient care. Issues like chronic understaffing, multiple health and safety violations, declining care quality, and hospital closures were highlighted. Furthermore, the private equity sector’s ownership concentration is significant, with five PE firms controlling nearly 75% of PE-owned hospitals. Remarkably, Apollo Global Management Inc. owns around 220 hospitals through its investments in Lifepoint Health and ScionHealth.
