Private equity’s joint venture takeover of nonprofit healthcare

Behind nonprofit partnerships, private equity firms are building a growing footprint across hospitals, hospice, rehabilitation, and outpatient care.

Over the past decade, private equity has dramatically expanded its presence across the healthcare system. While much of the public attention has focused on traditional acquisitions of hospitals, physician practices, nursing homes, and other providers, private equity firms are increasingly pursuing another strategy: joint ventures with nonprofit health systems.

PESP’s new report examines how these partnerships have become an increasingly important avenue for private equity-backed healthcare companies to expand across hospitals, rehabilitation facilities, ambulatory surgery centers, hospice, home health, behavioral health, and other sectors.

The report documents more than 500 healthcare facilities operated through nonprofit-private equity joint ventures—an undercount based only on publicly identifiable arrangements—and examines how these partnerships may introduce financial practices more commonly associated with traditional private equity ownership, including sale-leasebacks, management agreements, and related-party transactions, into nonprofit health systems.

The report also explores whether existing federal and state oversight frameworks have kept pace with these increasingly complex ownership structures. Much of the IRS guidance governing nonprofit-for-profit joint ventures dates to 1998 and 2004, before private equity invested more than $1 trillion in U.S. healthcare over the past decade and before today’s large private equity-backed healthcare platforms became so prevalent.

Key findings

• More than 500 healthcare facilities operate through nonprofit-private equity joint ventures.
• More than one-fifth (21.4%) of private equity-owned hospitals are owned through joint venture arrangements with nonprofit health systems.
• Apollo-owned LifePoint Health operates 61% of its hospitals through joint ventures with nonprofit and other healthcare providers.
• Nonprofit-private equity joint ventures now span hospitals, inpatient rehabilitation, hospice, home health, behavioral health, ambulatory surgery centers, urgent care, and other healthcare services.
• Existing oversight frameworks may not fully account for increasingly complex joint venture arrangements between nonprofit health systems and private equity-backed companies.

Interactive joint venture database

The report is accompanied by a database of nonprofit-private equity healthcare joint ventures identified by PESP through public disclosures.

The database includes hospitals and healthcare facilities operated through joint ventures involving private equity-backed companies and nonprofit health systems across multiple healthcare sectors. While extensive, it should not be considered a comprehensive list, as many joint venture arrangements are not publicly disclosed.

Download the report

Private equity’s joint venture takeover of nonprofit healthcare (PDF)