Bipartisan Senate Report Slams Private Equity Involvement in Healthcare 

Private equity investments in healthcare may harm patients, providers and hospitals, according to a new report released by Sens. Sheldon Whitehouse, the Rhode Island Democrat who chaired the Senate Budget Committee in the 118th Congress, and Chuck Grassley of Iowa, the committee’s senior Republican.The 162-page report highlights private equity’s growing role in the U.S. healthcare system, with a focus on two specific firms, Leonard Green & Partners and Apollo Global Management. After examining more than 1 million pages of documents from the investment firms and some of their subsidiaries and properties, including the Ottumwa Regional Health Center in Iowa, Senate investigators concluded that private equity’s financial model appears to pose “a threat to the nation’s health care infrastructure, particularly in underserved and rural areas.”In a statement, Grassley criticized the effect Apollo’s involvement in Ottumwa’s hospital has had on the local community. “Under private equity ownership, wait times at Ottumwa Regional Health Center have gone up as patient experience has gone down,” Grassley said. “The diminishing quality of care, service availability and care capacity at the hospital is forcing Ottumwa residents to travel significant distances in order to receive appropriate treatment. Iowans deserve better.”More broadly, Whitehouse said that “private equity has infected our health care system, putting patients, communities, and providers at risk. 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.”Whitehouse said that documents obtained by the Senate investigators showed that executives at Leonard Green and hospital operator Prospect Medical Holdings discussed profit-maximizing techniques for their various properties at board meetings, including cost-cutting, increasing the number of patients and reducing labor costs, with little attention paid to quality of care. “And while Prospect Medical Holdings paid out $645 million in dividends and preferred stock redemption to its investors—$424 million of which went to Leonard Green shareholders—it took out hundreds of millions in loans that it eventually defaulted on,” White said. “Private equity investors have pocketed millions while driving hospitals into the ground and then selling them off, leaving towns and communities to pick up the pieces.”Representatives for the investment firms told CBS News that they disagree with the conclusions reached by the Senate investigators.Like what you’re reading? Sign up for our free newsletter.