Private Equity in Healthcare – PESP’s July 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

Lawmakers introduce updated bill on PE-owned healthcare companies

• Senator Edward J. Markey (D-MA) and Congresswoman Pramila Jayapal (D-WA) introduced the Health Over Wealth Act, legislation creating greater transparency and oversight for private equity healthcare investments.
• According to the legislators, “The legislation would put safeguards in place to protect workers, patients, and health care quality, access, and safety; create stronger accountability measures for corporate greed; and close tax loopholes that benefit real estate investment trusts making money off of health care property.”
• A discussion draft of the bill was first introduced in April at a Senate HELP Subcommittee hearing investigating corporate greed in healthcare, where PESP’s Eileen O’Grady provided testimony.

New Mexico attorney general launches probe of patient care at private equity-run hospital – NBC News

• New Mexico’s attorney general Raúl Torrez announced an investigation into Memorial Medical Center, owned by Apollo Global Management’s Lifepoint Health.
• According to NBC News, the investigation seeks to determine whether the hospital “violated state laws by turning away indigent and low-income patients seeking care.” NBC previously reported the hospital turned away cancer patients or demanded upfront payments to secure treatments.

Steward Health Care saga continues

• The Senate HELP Committee voted to subpoena Steward CEO Ralph de la Torre and investigate the bankrupt health system.
• Federal prosecutors with the U.S. Attorney’s office in Boston are investigating Steward on allegations that include fraud and violations of the Foreign Corrupt Practices Act.
• Steward announced that it will close two of its Massachusetts hospitals, Dorchester-based Carney Hospital and Ayer-based Nashoba Valley Medical Center, pending approval from the bankruptcy court. Following the announcement, Massachusetts said that it would provide $30 million to ensure operations through the end of August. State and local lawmakers have been speaking out about the planned closures.
• The U.S. Food and Drug Administration has ordered Steward-owned North Shore Medical Center in North Miami-Dade to halt mammograms after a review found the images failed to meet standards.

JEC Report on private equity healthcare risks

• The United States Joint Economic Committee Democrats (JEC), chaired by Senator Martin Heinrich (D-NM), released a report examining the impacts of private equity in healthcare.
• The report cites PESP’s Risk Index and Hospital Tracker.

Envision leaves California, dodging major private equity verdict – Modern Healthcare

• Modern Healthcare reports that “Envision Healthcare, a top private equity-backed emergency physician staffing company, is exiting California and avoiding a lawsuit that threatened the legality of its business model in the state.”
• Envision was battling the American Academy of Emergency Medicine (AAEM) in a contract dispute. David Millstein, a lawyer for AAEM, told Modern Healthcare that “he believed Envision Healthcare didn’t want to see a negative, potentially precedent-setting verdict that might threaten its business more generally.”

When private equity buys a hospital, assets shrink, new research finds – Washington Post

• A new study published in Journal of the American Medical Association (JAMA) has found that “After private equity acquisition, hospital assets decreased by 24% relative to that of controls during 2 years.”
• One of the study’s authors told the Washington Post, “While private equity investors claim they infuse much needed capital into the hospitals they buy, we found just the
• opposite: private equity firms quickly liquidate hospitals’ assets.”
• The study was authored by researchers from University of California, San Francisco, City University of New York, and Harvard Medical School. The report authors and the Washington Post story cite PESP’s Hospital Tracker.

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

Blog Posts:

• Private Equity Health Care Acquisitions – June 2024
• Debunking the private equity industry’s messaging about its healthcare investments
• PESP endorses Health Over Wealth Act to ensure accountability in healthcare
• Private equity’s drug war profiteering 

Other Media Mentions:

• PESP Healthcare Director Mary Bugbee spoke to Mississippi Today about private equity’s involvement in behavioral health companies.
• The Las Cruces Bulletin cites PESP’s Hospital Tracker in its reporting on legislation in New Mexico establishing stronger oversight over private equity hospital transactions.
• PESP’s work was cited by Becker’s ASC Review on the growth of private equity interest in ambulatory surgery centers.