Media coverage

Business Insider : The plundering of America’s hospitals

April 21, 2024

A Business Insider story profiled multiple hospitals that have closed in recent years. The hospitals in question, all struggling financially, had three key things in common. Firstly, they served economically disadvantaged communities with limited healthcare access. Secondly, these hospitals had been under the ownership of for-profit entities at different times, including major private-equity firms like Cerberus, Leonard Green, and Apollo. Lastly, the real estate under these hospitals had been sold off to Medical Properties Trust (MPT), a relatively obscure real estate investor that has acquired around $16 billion worth of hospital real estate over the last twenty years, making it one of the largest owners of hospital beds globally.

Business Insider March 11, 2024: The plundering of America’s hospitals

MPT’s deals underscore how giant private-equity firms have profited while gutting a critical piece of America’s infrastructure, even on deals that turned out to be financial catastrophes for the hospitals and their communities.

As a result, hospitals in rural and underserved areas continued to be a difficult business proposition, and their private-equity investors were facing serious losses. In this case, private-equity firms found a new way to save their failed investments – by selling the land under the hospitals to MPT.

The more hospital real estate that MPT buys, the more money it makes in rent payments from the hospitals.

Eileen O’Grady, healthcare director at PESP spoke with Insider about MPT and private equity’s playbook in the healthcare industry, specifically about PE firm Leonard Green and its ownership of Prospect Medical hospitals.

“The pattern of using MPT to profit from the pain of impoverished patients was repeated by other leading investors. Prospect, a chain of hospitals in underserved communities, was bought by Leonard Green in 2010. It turned out to be a bad investment. According to the Private Equity Stakeholder Project, a research and advocacy group, Prospect lost over $600 million between 2015 and 2020.”

“Apollo’s hospital profiteering has resulted in dangerous conditions, closures and reduced access to services, and declining quality,” O’Grady told Insider about PE firm Apollo and its owned hospitals.

Hospitals in one Apollo hospital chain, LifePoint Health, rank among the worst in their states, and Moody’s has downgraded the company’s debt to reflect the company’s “Elevated financial leverage.” Patients and communities, once again, paid the price for private equity’s investment model.

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