News and blog

Private Equity in Healthcare – PESP’s March 2024 Roundup

April 2, 2024

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 

FTC, DOJ, and HHS Launch Cross Government Inquiry on Impact of Corporate Greed in Healthcare

  • In a press release announcing the cross-government inquiry into private equity and corporate control of healthcare, FTC, DOJ, and HHS stated: “Private equity firms and other corporate owners are increasingly involved in health care system transactions, and, at times, those transactions may lead to a maximizing of profits at the expense of quality care”
  • “When private equity firms buy out healthcare facilities only to slash staffing and cut quality, patients lose out,” said FTC Chair Lina M. Khan. “Through this inquiry the FTC will continue scrutinizing private equity roll-ups, strip-and-flip tactics, and other financial plays that can enrich executives but leave the American public worse off.”
  • See also “Senate Budget Committee launches investigation of PE hospital ownership” – Private Equity Stakeholder Project

The plundering of America’s hospitals – Business Insider

  • Reporting from Business Insider discusses several financially struggling hospitals serving low-income communities:
    • “They were all owned at various points by for-profit investors, including leading private-equity firms like Cerberus, Leonard Green, and Apollo. In a move that stripped the hospitals of one of their prime assets, the owners had sold the land beneath the facilities to a little-known real-estate investor called Medical Properties Trust
    • “For many of the hospitals, the deals proved disastrous. Once their real estate was sold to MPT, they were forced to pay rent on what had always been their own property. That added to the massive debt burdens already placed on the hospitals by their for-profit owners, deepening their financial woes. It also deprived Americans of desperately needed healthcare and put lives at risk — all while enriching some of the world’s wealthiest investors”
    • Healthcare Director Eileen O’Grady is quoted: “Apollo’s hospital profiteering has resulted in dangerous conditions, closures and reduced access to services, and declining quality”
  • Medical Properties Trust is also covered in “Powerful landlord could play key role in deal between Prospect Medical and Yale”
    • “Those hospitals then have to pay the monthly rent on real estate they used to own and it can really cut into operations; money that’s available to go toward very critical aspects of running a hospital,” Senior Healthcare Coordinator Mary Bugbee told Connecticut Public Radio. “Prospect and Steward especially, both of these systems are very much struggling right now. And a lot of that struggle has to do with the legacy of those sale-leaseback arrangements.”
  • See also, from PESP:

California Eyes Oversight of Private Equity Health Care Deals – Bloomberg Law

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

REPORT:Private Equity in U.S. Healthcare: Trends in 2023 Deal Activity

A new report from the Private Equity Stakeholder Project (PESP) delves into key trends shaping the industry and raises important considerations for policymakers, regulators, and patients

  • PESP identified a total of 1135 unique deals last year, encompassing 148 buyouts, 259 growth or expansion investments, and 728 add-on acquisitions to 422 unique platform companies
  • Key subsectors attracting significant investment included outpatient care, dental care, health IT, and medtech. Additionally, biotech, pharmaceuticals, and medical aesthetics emerged as hot areas for dealmaking
  • See coverage of the report in McKnight’s and HomeCare Magazine

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