Private Equity in Healthcare – PESP’s December 2024 Roundup

Each month, PESP’s Healthcare Team will be putting together a roundup that shares the latest news stories related to private equity in healthcare and highlights the work that our team has published in the last month.

In the news

If Walgreens Sells To Private Equity, Deal May Join Others Under Fire – Forbes

• Forbes reported a potential sale of Walgreens to private equity firm Sycamore Partners, writing, “If the speculation turns into reality, the deal could put the iconic drugstore chain and its thousands of pharmacies and healthcare services under private equity ownership.”
• The article quoted PESP’s press release on the topic, “ ‘Private equity has invested over $1 trillion in the U.S. healthcare sector over the last decade, and touches virtually every corner of the industry. This is despite the fact that private equity investment in healthcare companies carries substantial risk to patients, workers, and investors. The typical private equity investment playbook may lead to behavior that jeopardizes patient care and increases bankruptcy risk.’ ”

Beacon Hill salvages Steward crisis in final hours of the year – WBUR

• On December 31, WBUR reported that Massachusetts “Lawmakers rushed a hospital oversight bill to Gov. Maura Healey on Monday, agreeing on policy responses to the Steward Health Care crisis that aim to better regulate private equity firms and stiffen penalties for entities that fail to submit required information.”
• According to WBUR, the bill gives Massachusetts regulators “more regulatory oversight and enforcement authority over transactions involving private equity investors, health care real estate investment trusts and management services organizations.” The bill also “increases penalties for hospitals that fail to comply with data reporting requirements, mandates that lessors notify the state 60 days before repossessing medical equipment, overhauls how regulators manage care costs and assess resources, and blocks the Department of Public Health from issuing a license to establish or maintain acute care hospitals whose main campuses are leased from a real estate investment trust.”
• The bill does not “ban real estate sale-leaseback agreements, though it would require formal notice with state health regulators.”
• The bill now goes to Governor Maura Healey.

Steward Pennsylvania hospital closure could cut 848 employees – Becker’s Hospital Review

• Becker’s reported that, “Dallas-based Steward Health Care has filedtwo WARN notices in Pennsylvania for a total of 848 employees after it submitted a closure notice for Sharon (Pa.) Regional Hospital in bankruptcy court on Dec. 16… Steward planned to begin the closure process Dec. 17 to fully shut the hospital down by Jan. 6. It will work with patients and family to help locate alternative care and provide support to employees to aid in the transition, the spokesperson said.”
• On December 31, WBKN reported that “the president of Sharon Regional Medical Center announced an agreement has been made with Tenor Health Partners to take over operations at the hospital…The bankruptcy court in Houston will likely have the final say on whether the deal with Tenor can go forward.”

Warren Urges Fair Wellpath Bankruptcy for Harmed Inmates – Bloomberg Law

• Bloomberg Law reported that “Sen. Elizabeth Warren (D-Mass.) is urging top executives at troubled prison health-care provider Wellpath Holdings Inc. not to abuse the company’s bankruptcy proceedings by shortchanging incarcerated patients ‘harmed by medical malpractice.’”
• “H.I.G. Capital-backed Wellpath, one of the nation’s largest providers of health-care services to prisons and jails, should commit to ensuring fair payments for claims of deficient medical care while it restructures in Chapter 11, Warren said in a letter sent to Wellpath CEO Ben Slocum and the founders of H.I.G. that was seen by Bloomberg Law.”
• Warren’s letter cites PESP’s research multiple times, including a 2019 report titled, “HIG Capital’s and Wellpath’s Correctional Healthcare Investment Risks” and a 2022 report titled, “Private equity firms rebrand prison healthcare companies, but care issues continue.”

Healthcare team’s latest blogs, reports, and media mentions

New report: Recent policy and regulatory initiatives to address private equity’s negative impacts in healthcare

• The comprehensive report details the legislative and regulatory actions taken across the United States in response to the growing evidence of private equity’s detrimental impact on healthcare systems. From federal agencies to state legislatures, policymakers and regulators are increasingly scrutinizing private equity’s role in rising healthcare costs, patient harms, and financial risks in the sector.

Blog Posts:

• Drug testing billing fraud at private equity-owned labs
• Private Equity Healthcare Acquisitions – November 2024
• PESP responds to industry claims about medical debt
• Private equity takeover of Walgreens could mean risks to patients, workers
• PESP highlight private equity healthcare risks at conference

Other PESP healthcare news and mentions:

• Healthcare Research and Campaign Director Mary Bugbee was quoted in the Boston Globe, The Nation, and Bloomberg regarding Steward Health care’s collapse and the need for more robust regulations.
• The Harvard T.H. Chan School of Public Health cited PESP’s hospital tracker data in its blog post, “Private equity’s appetite for hospitals may put patients at risk.”