Senate report: Private equity endangers patient care in underserved hospitals

Editor's Note

A bipartisan Senate Budget Committee report accuses private equity firms of prioritizing profits over patients, compromising care in underserved communities, CBS News reported January 7. The investigation scrutinized the operations of Leonard Green & Partners and Apollo Global Management, alleging widespread financial mismanagement and underinvestment in hospitals they own.

According to the article, the 162-page report highlights financial maneuvers that Senate investigators say undermine the healthcare infrastructure, particularly in rural and underserved areas. The committee reviewed over one million documents and concluded that the private equity business model poses significant risks to patient safety and hospital sustainability.

The report specifically highlights the actions of two private equity firms, Leonard Green and Apollo Global Management. The former’s management of Prospect Medical Holdings, a California hospital company, faced scrutiny for financial practices that reportedly drained resources. Meanwhile, the private equity group issued $457 million in dividends, including $90 million paid to Prospect CEO Sam Lee. By 2019, Prospect faced $2.8 billion in liabilities, leading to service reductions and hospital closures, such as Delaware County Memorial Hospital in Pennsylvania. Leonard Green denies allegations of financial irresponsibility, asserting that its investments revitalized struggling hospitals.

As for Apollo Global Management, the report claims the firm’s handling of rural hospitals, including Ottumwa Regional Health Center in Iowa, was characterized by insufficient investments, service reductions, and quality of care failures, including inadequate responses to staff misconduct that endangered patients. According to CBS, Apollo is alleged to have profited while failing to meet legal obligations to maintain services and address community healthcare needs. Apollo disputes these claims, highlighting its investments and commitment to preventing hospital closures.

The full report CBS offers additional detail and context on each case as well as potential regulatory reforms to safeguard hospitals and patients.