Private Equity Ownership Degrades Health Care Quality, per Senate Report

A bipartisan investigation and subsequent report by the U.S. Senate Committee on the Budget found that private equity ownership of health care firms and hospital operators diminished the quality of care, while those private equity owners prioritized profits ahead of patients, the committee announced on Tuesday.

The report stated that private equity interest in the health care industry has “grown substantially in recent years. “At the start of the 2024, [the Private Equity Stakeholder Project] identified at least 457 PE-owned hospitals in the United States,” the report stated. “Of the hospitals identified as PE-owned, 35% were general acute care hospitals, 25.6% were rehabilitation hospitals, 22.5% were inpatient psychiatric facilities, and 16.6% were long-term acute care hospitals.”

The report also stated that five private equity firms account for nearly 75% of all PE-owned hospitals and that Apollo Global Management Inc., one of the firms studied in the report, owns around 220 hospitals through its ownership of Lifepoint Health and ScionHealth, making it the largest PE hospital owner.

The Senate committee, led by Senators Chuck Grassley, R-Iowa, and Sheldon Whitehouse, D-Rhode Island, probed two private equity firms—Leonard Green & Partners L.P. and Apollo and the hospital operators and hospitals they owned: Prospect Medical Holdings Inc. for LGP and both LifePoint Health and Ottumwa Regional Health Center for Apollo.

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The one-year investigation into the two firms, which included more than one million pages of documents reviewed by the committee, alleges that the private equity firms siphoned millions of dollars from the operators and hospitals they owned while patients suffered and hospitals experienced issues such as health and safety violations, reduced quality of care and understaffing.

“Private equity has infected our health care system, putting patients, communities, and providers at risk,” Whitehouse said in a statement. “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.”

Grassley, who represents Iowa, where Apollo-owned Ottumwa Regional Health Center is located, criticized the ownership of health care systems by private equity.

“Under private equity ownership, wait times at Ottumwa Regional Health Center have gone up as patient experience has gone down,” Grassley said in a statement. “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.”

A spokesperson for LGP did not respond in time to requests for comment.

“Apollo Funds have invested billions of dollars in Lifepoint and its predecessor companies, which ha[ve] been used to improve facilities, expand local healthcare services, recruit care providers, build new centers of care and upgrade technology across Lifepoint’s network,” a spokesperson for Apollo said in a statement to CIO. “Apollo Funds continue to support Lifepoint management’s emphasis on continuous improvements in quality of care, including at ORHC.”

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Tags: Apollo Global Management, Chuck Grassley, healthcare, Leonard Green & Partners, Private Equity, Sheldon Whitehouse

A group of public pension funds and the nonprofit For the Long Term are holding the inaugural Emerging Managers Week in February, intended to provide a platform for diverse and emerging managers looking for business opportunities and industry connections.

The week of conferences will kick off on February 11 with a virtual Emerging Manager Conference hosted by the Teacher Retirement System of Texas, followed by an Emerging Manager Forum and a reception held by For the Long Term, an organization that includes treasurers, comptrollers and investment staff from various states. The forum will include representatives from the Maryland State Retirement and Pension System, the Employees’ Retirement System of Rhode Island, the Connecticut Retirement Plans and Trust Funds and the Illinois State Treasury, all of which are part of For the Long Term.

On February 12, the Office of the New York City Comptroller will host its annual Diverse and Emerging Managers Conference in New York City. On February 13, the conference moves to Albany, New York, with the New York State Teachers’ Retirement System’s MWBE Investments and Professional Services Conference. This will be followed on February 14 by the New York State Common Retirement Fund’s Annual Emerging Manager and MWBE Conference.

The week will include discussions on the importance of diverse and emerging asset managers in producing risk-adjusted returns for public pension funds, as well as on negotiating fund agreements. The week’s discussions also include asset class breakout sessions regarding public equities, fixed income, real estate and real assets, sustainable investments and credit and opportunistic and absolute return strategies. Speakers at the conferences include internal pension fund staff and external investment consultants.

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“Expanding the pool of asset managers who are responsible for investing the assets of our pension funds is an essential part of our investing strategy and integral to delivering robust long-term returns for current and retired municipal employees,” New York City Comptroller Brad Lander said in a statement.

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