News and blog

After Paying $658 Million in Dividends and Fees to Investors, Prospect Medical Holdings Received $283 Million in Federal COVID-19 Aid

August 4, 2020

Private equity firm Leonard Green & Partners and other owners have collected $658 million in fees and dividends from safety net hospital chain Prospect Medical Holdings in the last several years. Prospect owns 17 hospitals in 5 states: California, Connecticut, New Jersey, Pennsylvania, and Rhode Island.

Rather than using those fees and dividends to support Prospect hospitals as they respond to the COVID-19 pandemic, the hospital company has instead relied on $283.3 million in grants and loans from the federal government.

Prospect Facilities with COVID-19 Relief Assistance

Prospect EntityStateGrantsLoans
Foothill Regional Medical CenterCA$1,174,106$10,394,879
Los Angeles Community HospitalCA$8,976,057 
Southern California Hospital at Culver CityCA$8,600,000 
Manchester Memorial HospitalCT$12,840,217$16,247,756
Rockville General HospitalCT$1,567,756$4,446,502
Waterbury HospitalCT$20,361,137$29,431,727
East Orange General HospitalNJ$14,032,510$10,152,201
Crozer Chester Medical CenterPA$22,811,076$62,150,753
Delaware County Memorial HospitalPA$11,463,867 
Prospect Crozer Home Health And HospicePA$565,853 
Our Lady of Fatima HospitalRI$11,365,700$8,753,440
Prospect Chartercare Physicians PracticesRI $590,928
Roger Williams Medical CenterRI$11,780,630$15,587,306
Total $125,538,909$157,755,492

Source: COVID Stimulus Watch database, HHS data as of July 28, 2020.

Prospect appears to have collected COVID relief money from three programs:

HHS Provider Relief Fund – General Distribution – Health and Human Services Department: Grants for providers who bill Medicare fee-for-service aimed to provide financial relief during the pandemic. Allocation is based on providers’ 2019 Medicare fee-for-Service payments.[1]

Provider Relief Fund COVID-19 High-Impact Payments ­- Health and Human Services Department: Grants designated for providers in high impact COVID-19 areas. Eligibility and payment amount are based on the number of COVID-19 admissions submitted to HHS.[2]

Medicare Accelerated and Advance Payment Program – Centers for Medicare and Medicaid Services: Allows providers to request advance or accelerated Medicare payments during public health emergencies. Loan amounts can be up to 100% of Medicare payment amount for a three-month period.[3]

COVID-19 Assistance to Prospect- By Program

ProgramAwarding AgencyAmount
HHS Provider Relief Fund – General Distribution (grant)Health and Human Services Department$36,392,888
HHS – Provider Relief Fund COVID-19 High-Impact Payments (grant)Health and Human Services Department$89,146,021
Medicare Accelerated and Advance Payment Program (loan)Centers for Medicare and Medicaid Services$157,755,492

Total: $283,294,401

Source: COVID Stimulus Watch database, HHS data as of July 28, 2020.

Prospect’s recently closed Texas health system, Nix Health, also received $2.3 million in grant funding through HHS. Nix likely received the funding by mistake, as the first round of HHS grants was distributed automatically and Nix had closed just a few months earlier. Prospect reportedly returned the grant money to HHS.[4] Nix ran five facilities in the San Antonio area until it was shuttered completely at the end of 2019, laying off nearly 1,000 workers.[5]

It is unknown how much of the money Prospect received from the federal government went into its hospitals. For example, the Wall Street Journal recently reported that Prospect is bidding as much as $400 million to purchase St. Francis Medical Center in Lynwood, California.[6]

The Leonard Green-led investor group that owns Prospect has recently come under fire by members of Congress for collecting at least $658 million from the hospital chain over the course of its ownership despite poor quality ratings, operating challenges, underfunded pensions, and regulatory scrutiny.[7]

See our reports on Prospect Medical Holdings and Leonard Green & Partners:

May 2020: UPDATE: Leonard Green-led ownership collected $658 million in dividends and fees from Prospect Medical Holdings despite challenges, commitment to regulators to forgo dividends

February 2020: Raiding the Safety Net: Leonard Green & Partners Seeks to Walk Away from Prospect Medical Holdings after Collecting $570 Million in Fees and Dividends









Sign up to our newsletter to receive news and updates from PESP

Click here