Private Equity in Healthcare – PESP’s October 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 

PE’s impacts on people with disabilities in the spotlight

• A new report by Disability Rights Education and Defense Fund (DREDF) analyzes the various ways private equity firms reap profits at the expense of people with disabilities, highlighting a few key areas: home and community-based services, corrections, DME, education, housing, and residential treatment centers, and nursing homes. The report cites PESP’s hospital tracker and various PESP reports.
• Senators Elizabeth Warren (D-MA) and Richard Blumenthal (D-CT) sent a letter to the Department of Health and Human Services (HHS), urging the agency to place greater oversight on private equity in healthcare, and particularly its impacts on wheelchair users and other vulnerable populations.
  • The letter focuses on National Seating and Mobility (NSM) and Numotion, owned by Cinven and AEA Investors respectively, and cites PESP and NDRN’s report: Private Equity in Durable Medical Equipment: How Private Equity Profits Off of Disabled and Chronically Ill Americans
• A column by Mike Erwin in The Progressive also rails against private equity ownership of wheelchair companies, citing PESP’s work.

PE healthcare bankruptcies continue

• Sun Capital’s Clinical Care Medical Centers, filed for bankruptcy. The Florida-based primary care chain primarily serves patients who are considered high-risk, underserved, and dual-eligible for Medicare and Medicaid.
• TPG-owned medical device manufacturer Exactech also filed for bankruptcy, citing untenable interest payments and litigation expenses. In 2021, Exactech’s implant devices were recalled due to faulty packaging, resulting in about 2,600 lawsuits.
• Private equity firm Goldner Capital Management, which previously owned nursing homes, also filed for bankruptcy.
• The bankruptcies continue a trend that PESP has previously pointed out of private equity-owned healthcare companies experiencing heightened financial distress.

Kindred plans to shutter two Chicago-area specialty hospitals – Crain’s Chicago Business

• Two private equity-owned specialty acute care hospitals in the Chicago area announced that they are closing within the next five months. They are owned by hospital chain ScionHealth, which is in turn owned by private equity firm Apollo Global Management.
• Apollo created ScionHealth as a spin-off in 2021. Since then, Moody’s Investors Service has consistently downgraded its credit rating due to high levels of debt.
• Earlier this year, PESP and AFT co-released a report on how Apollo’s ownership of ScionHealth, along with affiliated hospital company Lifepoint Health, jeopardizes patient care.

How Private Equity and an Ambitious Landlord Put Steward Health Care on Life Support – Organized Crime and Corruption Reporting Project

• An investigation by OCCRP examines nearly 300,000 internal documents leaked from Steward Health Care that show how Cerberus Capital Management, Medical Properties Trust, and top executives “drained billions from the hospital operator as it lurched towards bankruptcy and failed hospital patients.”
• PESP’s Mary Bugbee told OCCRP: “I don’t understand how in any situation, having money going out the door to pay rent every month when you used to own the real estate is going to benefit the hospital.” 

More on Steward Health Care’s ongoing struggle with its PE legacy

• In an op-ed in the Washington Post, Bethany McLean writes about how the private equity business model is at odds with quality healthcare: “It’s like the old fable about the scorpion who persuades the frog to carry it across the river and stings the frog midstream. Why? the frog asks as they both drown. ‘It’s in my nature,’ the scorpion replies.”
• Steward announced that it is laying off 255 employees at its Phoenix-based St. Luke’s Behavioral Health Center.
• Steward filed a notice of closure of its Norwood, MA hospital and four satellite facilities.

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

Report: Private Equity’s Footprint in Philadelphia Healthcare

• A new report by PESP researcher Michael Fenne offers an extensive, original analysis of private equity’s presence in a metro area’s healthcare sector.
• The report identifies approximately 900 private equity-owned healthcare provider locations across the Greater Philadelphia area, from small clinics to major hospitals, and highlights risks for patients and healthcare workers.
• The report was featured by the Philadelphia Inquirer as well as Health Exec.

Blog Posts:

• Private Equity Health Care Acquisitions – September 2024
• Apollo-owned ScionHealth quietly sells and leases-back 5 hospitals from REIT
• PESP and NDRN’s report on private equity’s impacts on wheelchair users cited in Senators’ letter
• Two Steward hospitals acquired by private equity-owned system
• Joint Economic Committee report highlights how private equity threatens healthcare, economy

Other Mentions:

• PESP Healthcare Director Mary Bugbee penned an article for AFT Health Care magazine: “How Private Equity Has Looted Our Hospitals”
• Director of Programs Eileen O’Grady was featured in a Vox article examining private equity’s presence in emergency rooms
• Moneywise cited healthcare researcher Michael Fenne’s recent report on private equity in medical debt twice: here and here. The report was also cited by Pennsylvania-based outlet The Keystone.
• The Charlotte Ledger cited Bugbee in its coverage of a physician group’s acquisition by TPG.
• Chief Healthcare Executive cited a joint report by AFT and PESP in its reporting on two Apollo-backed hospital closures.
• PESP’s work was cited in various other policy analyses on private equity in healthcare, including in Pluribus News, Becker’s Hospital Review, Becker’s ASC Review, and Bloomberg.