The Private Equity Stakeholder Project released a first-of-its-kind data project to track the insurgence of private equity ownership of our nation’s hospitals. The new PESP Private Equity Hospital Tracker provides a current and refreshed list of all private equity-owned hospitals in the U.S.
In a Bloomberg exclusive, reporter Lauren Coleman-Lochner wrote how private equity is “expanding its reach into troubled hospitals.” With the new hospital tracker as its focus, the story reported how more than a third of the hospitals private equity firms own serve rural (and often struggling) populations.
Bloomberg April 19, 2023: Private Equity Owns 30% of For-Profit Hospitals, Tracker Says
From the Bloomberg story:
“The Private Equity Stakeholder Project report points to common financing techniques such as sale-leasebacks where a hospital’s real estate is sold and then rented back to the facility, and concerns about the limited regulation and data available on private equity-owned facilities. ‘Private equity’s hospital profiteering has resulted in dangerous conditions, closures and reduced access to services, declining quality, and fraud,’ the report read.”
Bloomberg also interviewed Atul Gupta, an assistant professor of health-care management at the University of Pennsylvania’s Wharton School and senior fellow at the university’s Leonard Davis Institute of Health Economics. “Private equity may not be well suited to this kind of industry, which is just riddled with imperfections,” he said.
Gupta brought attention to the ease in which private equity can extract profit from healthcare investments without providing high-level care to patients. “When you have this kind of system with extremely high-powered financial incentives,” Gupta said, “they can do well without doing well by their consumers.” PESP has long shared the troubling nature of PE in the healthcare industry, where the trend of prioritizing profits over patient care is the norm.
The consequences of this type of hospital ownership by private equity firms have been borne mostly by healthcare workers and the communities they serve. Private equity’s hospital profiteering has resulted in dangerous conditions, closures and reduced access to services, declining quality, and fraud. With PE firms increasing their acquisitions of healthcare companies in recent years, more disclosure is a necessary tool for regulators and healthcare advocates.