Private Equity Firms Reap Payouts After Hospital Chain Received $1.6 Billion in CARES Act Support
September 28, 2021
In a new report, “Private Equity Firms Reap Payouts After Hospital Chain Received $1.6 Billion in CARES Act Support,” Private Equity Stakeholder Project examines LifePoint Health, a leading rural hospital chain owned by private equity firm Apollo Global Management.
In June 2021 LifePoint announced that it will acquire private equity-owned acute care provider Kindred Healthcare, creating a combined company with more than 77,000 employees in 34 states—the largest private-equity-owned healthcare company in the US.
The deal comes of the heels of LifePoint receiving $1.64 billion in Federal COVID-19 stimulus aid. Although LifePoint qualified for the aid, lawmakers have raised concern about healthcare companies owned by cash-rich private equity firms effectively being subsidized by taxpayer dollars.
LifePoint under Apollo’s ownership has come under fire in recent years for aggressive policies that prioritize profit over patient care. LifePoint is likely spending hundreds of millions of dollars acquiring another healthcare company through the Kindred transaction, months after receiving over $1.6 billion in Federal aid, rather than investing in operations at existing facilities.
Key Points
– Private equity firm Apollo Global Management owns rural hospital company LifePoint Health.
– LifePoint collected $1.64 billion in COVID stimulus grants and loans as of July 2021.
– In April 2021, Apollo sold LifePoint from one of its private equity funds (Apollo Investment Fund VIII) to another fund managed by Apollo (Apollo Investment Fund IX), making a $1.6 billion profit from the transaction and likely generating hundreds of millions of dollars in carried interest for the private equity firm and its executives.
– In June 2021, LifePoint announced it will acquire acute care provider Kindred Healthcare, which is owned by a consortium of private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe (WCAS). The combined company will have 77,000 employees in 34 states and will be the largest private-equity-owned healthcare company in the US.
– LifePoint under Apollo’s ownership has come under fire in recent years for aggressive policies that prioritize profit over patient care. LifePoint hospitals lag the national average in terms of quality based on Centers for Medicare and Medicaid Services (CMS) quality (i.e. star) ratings.
– What is striking about the transfer of LifePoint from Apollo Fund VIII to Fund IX and LifePoint’s acquisition of Kindred is that both represent large transfers of wealth to private equity firms just months after LifePoint received $1.6 billion in federal stimulus and while many LifePoint hospitals are struggling with surges in COVID-19 cases.
