Private Equity in Healthcare – PESP’s February 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

Steward Health Care’s ongoing financial and patient care issues

• February saw continued coverage of the dire financial situation faced by many of Steward’s hospitals, especially those in Massachusetts. Private equity firm Cerberus Capital Management owned Steward from 2010-2020.
  • Healey demands financial documents from Steward, says company should get out of Mass. Hospital market – Boston Globe
  • ‘It frankly disgusts me.’ Governor Healy steps up criticism of Steward – Boston Globe
  • A new mom died after giving birth at a Boston hospital. Was corporate greed to blame? – CBS News
  • ‘Long concerned’: Massachusetts lawmakers probe Cerberus for Steward answers – Becker’s Hospital Review
  • Scenes from a bat cave – how Steward Health left a Space Coast community hospital in a literal world of sh*t – American Prospect

US to prioritize private equity’s role in healthcare fraud – Bloomberg Law

• According to Bloomberg Law, the head of the Justice Department’s Civil Division, Brian Boynton, announced an increased focus on private equity’s role in causing healthcare fraud
  • “The department’s civil investigators are increasingly noticing private equity, venture capital, and other investing sources influencing medical provider behavior, he said. They do this by ‘providing express direction for how a provider should conduct their business, or more indirectly by providing revenue targets or other indirect benchmarks intended to prioritize reimbursement.’”
• See PESP’s 2021 report, “Money for nothing: How private equity has defrauded Medicare, Medicaid, and other government health programs, and how that might change.”

Colorado regulators force anesthesiology giant to shrink – Washington Post

• Washington Post reported that “U.S. Anesthesia Partners, one of the largest anesthesia practices in the nation, will give up exclusive contracts at five Colorado hospitals to settle allegations by the Colorado Attorney General’s Office that the company cornered the Colorado market, engaged in anti-competitive practices and drove prices up 30 percent over other firms.”
• S. Anesthesia Partners was created by private equity firm Welsh, Carson, Anderson & Stowe in 2012, which is currently a capital partner to the group, alongside Berkshire Partners and GIC.
• See more coverage from STAT about the ongoing antitrust saga face by U.S. Anesthesia Partners.

Justice Department calls for dismissal of the Corizon bankruptcy – Business Insider

• The DOJ’s US Trustee Program has called for the dismissal of Corizon’s bankruptcy
• According to Business Insider, “Corizon had engaged in a controversial legal maneuver called the Texas Two-Step in an attempt to dislodge hundreds of lawsuits from prisoners and their families that alleged serious medical neglect, claims the Trustee says amount to $775 million.”
• See PESP’s report on the Corizon/YesCare bankruptcy: “YesCare Dodges Liability for Prison Conditions: Merger, Division, and Bankruptcy” (October 2023)

FTC Releases Agenda for Virtual Workshop on Private Equity in Health Care – Federal Trade Commission

• The FTC will be holding a virtual workshop on March 5, 2024 from 12:30-4pm EST examining the role of private equity investment in health care markets. A livestream is available here.

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

REPORT:How private equity gets its cut from Medicare Advantage

A new report from the Private Equity Stakeholder Project (PESP) reveals how private equity gets its cut from Medicare Advantage. See coverage of the report in FierceHealthcare, Modern Healthcare, STAT, Politico, Healthcare Dive, and twice in Becker’s Payer Issues.

UPDATE to PESP’s private equity-owned hospital tracker

• The updated data shows that at least 460 US hospitals are owned by private equity firms. Over a quarter (26%) of private equity-owned hospitals serve rural populations.
• Only a handful of private equity firms continue to dominate the list of PE-owned hospitals. By far the largest private equity owner and operator of hospitals is Apollo Global Management. PESP tracked at least 224 hospitals through Apollo’s two health systems Lifepoint Health and ScionHealth. Apollo’s stranglehold over hospitals has received further scrutiny in recent months in a bipartisan investigation by the Senate Budget Committeeand a PESP report.
• See coverage of the updated tracker in Healthcare Brew and HealthExec.

Blog Posts:

• Private equity healthcare acquisitions – January 2024
• Antitrust enforcement and consolidation in veterinary medicine
• Private equity firms overwhelm federal dispute process
• California legislation aims to safeguard against private equity in healthcare

Other Media Mentions:

• Healthcare Director Eileen O’Grady was quoted in the Texas Tribune’s article, “Does UT Tyler Health Science Center’s deal with private equity shield doctors from malpractice suits?”