This week, two bipartisan members of the Senate Budget Committee, Sheldon Whitehouse (D-Rhode Island) and Chuck Grassley (R-Iowa), launched an investigation into the infamously secretive world of private equity and its impact on healthcare.
The senators initiated the probe to investigate what they’ve termed as “questionable financial transactions” that could be negatively affecting care quality for patients at hospitals owned by private equity firms. These transactions under scrutiny include excessive debt triggered by leveraged buyouts, asset stripping and various cost-cutting measures.
Over the previous decade, private equity investors have spent an estimated $1 trillion on healthcare acquisitions. Private equity firms were responsible for 56% of all physician practice acquisitions since 2019, according to a recent report from the American Hospital Association. Moreover, Bain & Company’s report revealed that private equity firms currently own at least 130 hospitals in the country’s rural areas.
On Wednesday, the senators sent letters to private equity firms Leonard Green & Partners and Apollo Global Management, along with several provider organizations that operate private equity-owned hospitals. A study highlighted in the letters noted that private equity firms often prioritize profit over provider retention and patient safety.
Apart from this, there have been instances of adverse patient outcomes linked to private equity investment in hospitals. One significant incident at Ottumwa Regional Health Center led Senator Grassley to write to multiple companies with ownership interests in the health center, following media reports of sexual assaults on several sedated patients at the facility.
The investigation’s scope has further widened to include private equity deals impacting hospitals in multiple states. The senators have asked these organizations for financial reports, business contracts, and staffing documentation in an attempt to uncover the effect private equity ownership has on hospitals.
Legal professionals and corporate entities associated with healthcare and private equity sectors should closely follow this investigation, as its findings could influence future regulatory actions and legislation.
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