PESP Updates Private Equity Hospital Tracker

PESP Updates Private Equity Hospital Tracker

488 U.S. hospitals are now owned by private equity, and since last year’s update, 30 private equity-owned facilities saw their CMS star ratings decrease

Today, Private Equity Stakeholder Project (PESP) announced the launch of its updated Private Equity Hospital Tracker, providing an updated and comprehensive overview of private equity ownership of hospitals across the United States. The tracker reveals that approximately 488 U.S. hospitals are currently owned by private equity firms, representing 8.5% of all private hospitals and 22.6% of all proprietary for-profit hospitals.

The updated tracker also illustrates declining conditions at some private-equity-owned hospitals. Since last year’s Hospital Tracker update, 30 private equity-owned facilities saw their Centers for Medicare & Medicaid Services (CMS) star ratings decrease, and the number of private equity-owned hospitals with a 1-star rating—the lowest possible rating—more than doubled, from ten to 23 facilities.

The decline of Apollo Global Management’s Lifepoint Health facilities in North Carolina stands out in particular; three Lifepoint hospitals in the state have seen their CMS star ratings reduced over the past year, and one remains at a 1-star rating. None of the ratings for Lifepoint’s North Carolina hospitals have improved since the last update. PESP delved into the decline of Lifepoint’s North Carolina hospitals in this case study, which also examines CMS data on a number of other indicators including hospital acquired infections, heart failures, and ER wait times.

Other key findings in the updated tracker include:

•  PE Firms with Significant Market Share: A handful of private equity firms, such as Apollo Global Management, Equity Group Investments, and One Equity Partners, control a significant portion of private equity-owned hospitals.
• Geographic Concentration: Texas has the most private equity-owned hospitals (108), while New Mexico has the highest proportion (36.2%).
• Rural Impact: At least 27.7% of private equity-owned hospitals serve rural populations, indicating a growing presence of private equity in rural healthcare services.

The tracker also details the financial tactics private equity firms employ, such as high leverage, sale-leaseback transactions, and debt-funded dividends, which can destabilize hospitals and divert resources away from patient care.

The inadequate regulations surrounding hospital ownership, especially concerning the predatory financial practices of private equity investors, makes it challenging to maintain accurate and current data on private equity involvement in hospitals. As private equity healthcare acquisitions maintain a steady pace, more transparency and oversight is needed to protect hospital workers, patients, and communities.

Since PESP’s Private Equity Hospital Tracker was first released in 2023, it has provided an accurate, up-to-date, and accessible tool to shed light on the extent of private equity hospital ownership. The Hospital Tracker is a user-friendly database that provides readers with a sortable and searchable list of U.S. hospitals and their ownership companies. Additionally, the tracker contains an interactive map of all PE-owned hospitals and density data of hospitals per state.

The private equity business model, which is characterized by the pursuit of outsized profits over short time horizons and a reliance on high levels of debt, is in many ways incompatible with providing quality, affordable healthcare. PESP’s Private Equity Hospital Tracker serves as an important tool in ensuring the public has necessary transparency about who owns their local hospitals.