Private equity in healthcare – PESP’s January 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

US private equity portfolio company bankruptcies spiked to record high in 2023— S&P Global Market Intelligence

• Bankruptcy filings by private equity- and venture capital-backed companies in the US surged to 104 in 2023, the highest annual total on record, according to S&P Global Market Intelligence data.
• The total represents 174% growth over the 38 US portfolio company bankruptcy filings in 2022.

KKR-backed BrightSpring prices IPO below range to raise $633 mln — Reuters

• BrightSpring Health Services, which is backed by private equity firm KKR & Co Thursday priced its initial public offering below its targeted range to raise $633 million
• In 2022, a yearlong BuzzFeed News investigation found “KKR focused on expanding the business even as a crisis mounted in its group home division, where conditions grew so dire” that “some of the most vulnerable people in its care suffered and died”
• Also see KKR-Backed BrightSpring Sinks 15% in Debut After IPO Flop — Bloomberg News

Medical Properties Trust’s stock drops to 14-year low as tenant falls $50 million behind on rent — MarketWatch

• Medical Properties Trust Inc.’s stock fell 29% after the real-estate investment trust said one of its tenants, Steward Health Care System, is $50 million behind in rent payments.
• Steward was owned by Cerberus Capital from 2010 to 2020
• The hospital operator recently announced plans to close one campus in Massachusetts and another in Texas, and in January, Mass General Brigham withdrew its physicians from two Steward campuses

Malpractice plaintiffs seek to end prison health co. bankruptcy— Reuters

• Lawyers have asked a bankruptcy judge to toss the Chapter 11 case of a Corizon subsidiary, saying the prison healthcare provider’s bankruptcy was a fraud from the start
• Also see Warren urges DOJ to stop ‘abusive’ prison health bankruptcy — Reuters
• See PESP’s report on the Corizon/YesCare bankruptcy: “YesCare Dodges Liability for Prison Conditions: Merger, Division, and Bankruptcy” (October 2023)

Health care: The problem with private equity’s role in medicine — Boston Globe Editorial Board

• “Expanding the law to require notification of transactions involving for-profit, non-health care entities, with a low revenue threshold, would increase transparency. It would also provide oversight, since the commission can conduct in-depth investigations on market impacts or refer transactions to the attorney general for scrutiny.”
• “Lawmakers could consider regulating the terms of financial relationships, like limiting the amount of debt that can be used in a health care transaction or imposing financial liability on a private equity firm if a provider declares bankruptcy.”

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

Report:Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers

• A new report from the Private Equity Stakeholder Project (PESP) reveals how private equity firm Apollo Global Management’s ownership of two major American hospital systems degrades services, hurts workers, and puts patients at grave risk.
• See coverage of the report in Becker’s Hospital Review, Modern Healthcare, STAT News, Ars Technica, HealthCare Business News

Blog Posts:

• Private Equity Healthcare Acquisitions – December 2023

Media Mentions:

• PESP’s private equity-owned hospital tracker was cited in Modern Healthcare, Mergers & Acquisitions, Transacted, HealthLeaders Media,
• The Boston Globe cites a recent report from PESP and the National Disability Rights Network on the role of private equity in the durable medical equipment industry in “Senate voting on bill to speed wheelchair repairs in Mass.”
  • The Boston Globe Editorial Board also mentions the report in “Health care: The problem with private equity’s role in medicine”
• Stateline quotes PESP senior healthcare coordinator Mary Bugbee in “’Shell game’: When private equity comes to town, hospitals can see cutbacks, closures”
• Stateline also quotes Mary and PESP senior coordinator Michael Fenne in “Private equity’s growing footprint in home health care draws scrutiny”
• The Louisville Courier Journal quotes an October report from PESP in “Company in charge of Louisville jail health care when inmates died is back, with a new name”