Senate report slams private equity's hospital ownership
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Illustration: Allie Carl/Axios
Private equity's medical adventure has taken another detour to the ER, with the Senate Budget Committee releasing a bipartisan report that slams the industry's stewardship of hospital chains.
Why it matters: This caps off a year in which federal politicians zeroed in on private equity ownership of health-care providers, including the Steward Health debacle, and pushes Congress one step closer to new regulations.
Zoom in: The report focused on two hospital chains, owned respectively by Leonard Green & Partners and Apollo Global Management.
- In both cases, the report found that financial interests were prioritized over patient interests, and that certain promises weren't kept.
- Leonard Green was hit harder than was Apollo, in part due to the former's use of a dividend recap and hospital closures. But Apollo, which didn't provide the committee with as much financial information, did pull management fees from its hospitals while stopping certain services that it had pledged to maintain.
- Leonard Green tells Axios that it "respectfully disagree(s) with the findings in the report," while Apollo said that it's investment has helped maintain care in underserved rural areas. Neither firm would do an on-the-record interview about the report.
Catch up quick: This particular investigation was launched by Sen. Charles Grassley (R-Iowa), after revelations that a male nurse at an Apollo-owned hospital sexually assaulted nine incapacitated female patients. That nurse later overdosed on drugs acquired from the hospital.
The intrigue: The Senate soon will be asked to confirm Stephen Feinberg as deputy secretary of Defense, following a nomination from President-elect Trump.
- Feinberg is the co-CEO and chief investment officer of Cerberus, the private equity firm that owned and controlled Steward Health (despite its weird claims to the contrary). Got to wonder if that experience will play a role in his hearing and a subsequent vote.
The bottom line: Legislation to change the rules on private equity's health investments has languished, and the industry clearly has more political power now than it did two months ago, but at some point these bipartisan investigations and reports could reach a critical mass.
