Private equity-owned healthcare puts ‘profits over patients,' Senate report finds

Private equity-owned healthcare entities are putting “profits over patients,” leading to negative consequences for hospitals across the country, leaders of the Senate Budget Committee contended in a newly-released bipartisan report.

The 170-page report, issued Jan. 7 by Sens. Chuck Grassley, R-Iowa, and Sheldon Whitehouse, D-R.I., specifically focuses on Lifepoint Health, a healthcare provider owned by Apollo Global Management, and hospital operator Prospect Medical Holdings, which Leonard Green & Partners previously owned.

The investigation, which is based on over one million pages of documents, “highlights systemic issues with PE investment in health care, including underinvestment in critical hospital infrastructure, understaffing, and the pursuit of financial gains through leveraged buyouts and dividend extractions—often to the detriment of patients and hospital operations,” according to the report.

Grassley first launched an inquiry into Apollo and Lifepoint in March 2023, following revelations that a nurse practitioner sexually assaulted nine patients at one of Lifepoint’s hospitals in Iowa. In December 2023, Whitehouse joined Grassley in the inquiry and expanded the investigation to include Prospect and Leonard Green, according to the report.

The report contends that Lifepoint and its predecessors’ “underinvestment” in the Iowa hospital resulted in “declining conditions and quality of care that allowed egregious events to occur” there.

Leonard Green’s previous ownership of Prospect also led to “multiple health and safety violations as well as understaffing and the closure of several hospitals,” according to the report.

“Private equity has infected our health care system, putting patients, communities, and providers at risk,” Whitehouse said in a Jan. 7 news release. “As our investigation revealed, these financial entities are putting their own profits over patients, leading to health and safety violations, chronic understaffing, and hospital closures.”

The report comes amid scrutiny from regulators and lawmakers on both the state and federal level regarding private equity investment in healthcare.

On Jan. 8, Massachusetts Gov. Maura Healey signed a law that will impose financial reporting requirements from the state’s Center for Health Information and Analysis on private equity investors, real estate investment trusts and management service organizations as well as increase non-compliance fines, among other things, according to Bloomberg.

In Washington, lawmakers have introduced several bills aimed at PE investments in healthcare, including one that would jail private equity executives who “loot” healthcare entities such as nursing homes and hospitals.

Apollo, Lifepoint, Leonard Green and Prospect all pushed back on the Senate report’s findings.

An Apollo spokesperson said in a statement that the company’s investments in Lifepoint and its predecessor companies have "been used to improve facilities, expand local healthcare services, recruit care providers, build new centers of care and upgrade technology across Lifepoint’s network.”

“As a result of these investments, quality of care at Lifepoint hospitals has improved, according to third party ratings like Leapfrog as well as CMS Star Ratings,” the spokesperson said. “At a time when many rural hospitals are under pressure and at risk of closing, Lifepoint has not had to close a single hospital and is committed to providing critical services in underserved areas.”

Lifepoint said that it’s dedicated to providing quality healthcare, and “in the face of many challenging industry and community circumstances, we have worked diligently to expand access to care and bring quality providers, caregivers, and technology to address our patients’ needs,” a spokesperson said in a statement.

“We appreciate the Senate committee’s attention to these issues, and we share the senators’ commitment to ensuring that all American communities have access to the healthcare services they need,” the spokesperson added.

A spokesperson for Leonard Green said they “respectfully disagree with the findings in the report,” as their investment “enabled Prospect to invest in previously closed or failing hospitals, ensuring healthcare access for the underserved, and to invest over $750 million in its hospitals and provide $900 million in charity care.

At the time of exit, almost four years ago, Prospect was in strong financial condition with access to over $500 million to support its operations.”

Prospect said it’s “disappointed by the committee report’s false conclusions and apparent omissions of key facts,” as the report doesn’t account for the company’s “many positive contributions to the communities” it serves and does not “accurately reflect the focus on quality of care and patient safety” at its hospitals, according to a company statement.

“Nearly all the hospitals Prospect acquired were cash-starved, neglected, in disrepair and on the verge of closure or bankruptcy,” the statement said, noting the company’s $750 million and $900 million investments in hospitals and charity care to patients, respectively. “That is the exact opposite of putting profits above patients,” the statement contends.