Private Equity in Healthcare – PESP’s June 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

Senator Warren introduces bill to penalize hospital looting

• On June 11, 2024 U.S. Senators Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.) introduced the Corporate Crimes Against Health Care Act of 2024 to root out corporate greed and private equity abuse in the health care system.
• The legislation is largely a response to the looting and subsequent bankruptcy of Steward Health Care in Massachusetts: “When private equity gets hold of health care systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences,” said Senator Warren.
• “Private equity firms have made a killing out of looting vulnerable hospitals and putting patients and healthcare systems at risk,” said PESP policy director Chris Noble in the bill’s press release. “Grounded in the common-sense idea that U.S. healthcare systems should prioritize safeguarding our long-term health over short-term profits, this legislation is a necessary and timely solution to that problem.”

Nursing home bankruptcies in two states

• Pennsylvania: The Pittsburgh Post-Gazettereported on 21 long-term care facilities that recently went into bankruptcy, nearly all investor-owned.
  • The report’s author writes that the bankruptcies “signal instability in an industry that’s also being pinched by private equity investment strategies meant to squeeze profits from nursing home assets – sometimes at the expense of patient care, health care advocates say.”
  • The Post-Gazette’s Editorial Board discussed another, earlier bankruptcy impacting Pennsylvania patients, calling private equity and nursing homes “a match made in hell.”
• Florida: The Wall Street Journal reported on LaVie Care Centers, the largest operator of skilled nursing homes in Florida before the pandemic, which filed its second Chapter 11 bankruptcy since 2021.
  • PESP’s Director of Programs, Eileen O’Grady, noted the involvement of private equity firm Formation Capital, which STAT highlighted in its coverage of the bankruptcy: “This is a really good example of the way that nursing home ownership is completely obscured,” O’Grady told STAT.

Cesarean sections in Florida

• Florida doctors may now perform cesarean sections outside of hospitals due to new legislation that was backed by private equity-owned maternity clinics, reported HealthExec.
• Women’s Care Enterprises, which lobbied for the newly relaxed regulations, according to HealthExec, has been owned by private equity firm BC Partners since 2020. The company employs over 250 physicians and 130 midwives and other medical professionals, with operations in Florida, California, and Kentucky.
• Bloomberg opinion columnist Lisa Jarvis wrote that private equity’s push to build dedicated C-section centers could be part of a larger trend to focus on well-reimbursed procedures. She raised the concern that these centers could pursue unneeded caesarians: “Already, data suggest that more women receive C-sections in hospitals where the profits per procedure are higher.”

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

Reports

• PESP released a new report titled, “The Pillaging of Steward Health Care: How a private equity firm and hospital landlord contributed to Steward’s bankruptcy.”
  • Steward Health Care is a multi-state hospital system that was owned by private equity firm Cerberus Capital Management from 2010 to 2020. Cerberus reportedly made $800 million in the decade it owned Steward.
  • Since 2018, Steward has closed six hospitals in the US, resulting in the layoffs of at least 2,650 workers and reduced access to care for the communities they served.
  • On May 6, 2024, Steward Health Care filed for Chapter 11 bankruptcy, reporting over $9 billion in liabilities. $6.6 billion of its reported liabilities are long-term lease liabilities owed to Medical Properties Trust.

Blog Posts:

• Private equity healthcare acquisitions – May 2024
• Coalition calls on federal agencies to fight private equity’s healthcare abuses
• 11 attorneys general support strengthening oversight over PE in healthcare

Other Media Mentions:

• Healthcare Director Mary Bugbee spoke with The Lever about private equity’s role in in-home care.
• Gretchen Morgenson of NBC News cited PESP’s Private Equity Risk Index in reporting on a private equity-owned hospital in New Mexico.
• The Santa Fe New Mexican used PESP’s hospital tracker in reporting on state oversight legislation.
• Healthcare Brew cited PESP in “Private equity is flying to behavioral health. What’s up with that?”