Private Equity in Healthcare – PESP’s November 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

CareMax becomes latest health system to file for bankruptcy – Bloomberg

• CareMax Inc., which runs a system of medical centers catered toward elderly patients, filed for bankruptcy on Nov. 17, as reported by Bloomberg.
• PE firm Deerfield Management became an investor in CareMax in 2021 through a reverse merger involving one of its affiliates. As of September 2024, Deerfield was the largest shareholder of CareMax (CMAX) stock, with 530,230 shares.
• PE-backed ClareMedica has a reached a sale deal with CareMax to acquire the majority of CareMax’s 46 operating clinics and other business locations, according to Bloomberg Law.
• ClareMedica is owned by private equity firm Beecken Petty O’Keefe & Company.

Michigan hospital that lost Medicare funding files for bankruptcy – Becker’s Hospital Review

• On November 19, Becker’s reported that Pontiac General Hospital had filed a WARN notice 15 to lay off 248 employees after the hospital unexpectedly learned that it was excluded from receiving Medicare funds.
• On November 25, Becker’s reported that Pontiac General had filed for Chapter 11 bankruptcy.
• Pontiac General Hospital is owned by Sant Partners.

General Catalyst to acquire Summa Health for $485M – Becker’s Hospital Review

• Summa Health is a nonprofit health system based in Akron, OH, with three hospitals and 14 medical centers.
• General Catalyst is a venture capital firm with investments in over 700 portfolio companies.
• According to Becker’s, “This is the venture capital firm’s first hospital purchase after months of statingits goal to acquire a health system.”

Updates on Prospect Medical Holdings

Astrana Health to acquire part of Prospect Health for $746 million – Becker’s Hospital Review

• Astrana Health has entered into a $745 million definitive agreement to acquirecertain assets and businesses from Los Angeles-based Prospect Health System, according to Becker’s.
• “Medical Properties Trust, one of the world’s largest real estate owners, expectsaround $200 million in total proceeds from the sale, according to a Nov. 8 news release. Most of the cash is expected in the first half of 2025, with $50 million expected by 2027.”

Hospital Landlord MPT Seeks Control of California Entities – Bloomberg

• On Nov. 19, Bloomberg reported that “Medical Properties Trust Inc., one of the largest hospital landlords in the US, has moved to take control of three Southern California health care entities after accusing the owner — Prospect Medical Holdings— of defaulting on debt.”
• According to Bloomberg, “MPT announceda restructuring of its agreement with Prospect last year after months of missed rent payments. Under the deal, MPT wound up holding more than $1 billion worth of assets related to Prospect. The health care company refinanced some debt, but still owes hundreds of millions of dollars to its landlord and other lenders.”
• Between 2010 and 2021 Prospect was owned by Los Angeles-based private equity firm Leonard Green & Partners. Under Leonard Green’s ownership, Prospect sold off the bulk of Prospect’s real estate to MPT for approximately $1.4 billion. In 2021, Leonard Green & Partners exited its stake in Prospect, with the system left in $3.1 billion of debt.

Steward Health Care raided the coffers of its in-house malpractice insurer, leaving claimants, doctors in limbo – The Boston Globe

• On November 26, The Boston Globe reported that “Executives at the overextended hospital chain have treated their in-house malpractice insurer, TRACO, like a piggy bank, pulling cash from it at will, and severely depleting the assets meant to cover claims of medical harm.”
• According to the Globe, “The grim financial picture means that patients who suffered from shoddy care at Steward facilities could be harmed a second time, when they are unable to collect what they’re owed.”
• For more information on Steward Health Care, see PESP’s June 2024 report, “The Pillaging of Steward Health Care: How a Private Equity Firm and Hospital Landlord Contributed to Steward’s Bankruptcy.”

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

Blog Posts:

• Private Equity Healthcare Acquisitions – October 2024
• PE-owned primary care chain for poor Floridians goes bankrupt
• Private equity accountability transcends electoral politics

Other PESP healthcare news and mentions:

• Healthcare Research and Campaign Director Mary Bugbee presented at the 31^st Princeton Conference in Boston, MA alongside Dr. Zirui Song and Dr. Yashaswini Singh on a panel titled, “The Impacts of Private Equity in the U.S.: Micro and Macro Perspectives.”
• PESP’s Hospital Tracker was cited by Healthcare Brew in its article, “How states are trying to control private equity’s effect on healthcare.”
• Michael Fenne’s report, “Private Equity’s Footprint in Philadelphia Healthcare” was cited in Health Exec and Preqin.
• Director of Programs, Eileen O’Grady, was quoted in a Healthcare Dive piece about CareMax’s recent bankruptcy: “Private equity-backed companies typically carry higher levels of debt, leaving them more vulnerable to market forces.”