Private Equity: The Metastasizing Disease Threatening Health Care

The authors contend that private equity firms aggressively loot US health care facilities, specifically safety-net and rural hospitals, to extract profits through fees and dividends while reducing quality of care and increasing debt. Using the case of Leonard Green & Partners and Prospect Medical Holdings, the text highlights how firms profit while hospitals suffer cumulative losses. To address this, the authors propose creating joint liability for firms and their portfolio companies, increasing FTC scrutiny of mergers, improving transparency via HHS and CMS, and closing the carried interest tax loophole.

• Private equity firms have significantly penetrated the US health care sector, with at least 386 hospitals currently under private equity ownership. This represents 9 percent of all private hospitals and 30 percent of all proprietary for-profit hospitals, with 34 percent of these serving rural populations.
• The ownership of Prospect Medical Holdings by Leonard Green & Partners serves as an example of private equity extracting wealth at the expense of care; the firm and minority owners took approximately $658 million in fees and dividends while the hospital company experienced a $603 million cumulative comprehensive loss between fiscal years 2015 and 2020.
• Private equity investment in health care is characterized by harmful practices including the looting of safety-net hospitals, the stripping of real estate, the cutting of less profitable services, and the exploitation of government funding programs, leading to fraud and reduced access to services.
• The authors propose four primary federal interventions to regulate private equity in health care: establishing joint liability for firms and portfolio companies (as in the Stop Wall Street Looting Act), increasing FTC antitrust enforcement on mergers, requiring HHS and CMS to provide transparency on private equity's impact on quality, and closing the carried interest tax loophole.

APA

Stewart, E., & Baker, J. (2023). Private Equity: The Metastasizing Disease Threatening Health Care. Private Equity Stakeholder Project. https://pestakeholder.org/news/private-equity-the-metastasizing-disease-threatening-health-care/

Chicago

Stewart, Emily, and Jim Baker. Private Equity: The Metastasizing Disease Threatening Health Care. Private Equity Stakeholder Project, 2023. https://pestakeholder.org/news/private-equity-the-metastasizing-disease-threatening-health-care/.

Wikipedia

{{cite press release |last1=Stewart |first1=Emily |last2=Baker |first2=Jim |title=Private Equity: The Metastasizing Disease Threatening Health Care |publisher=Private Equity Stakeholder Project |date=18 December 2023 |url=https://pestakeholder.org/news/private-equity-the-metastasizing-disease-threatening-health-care/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{stewart2023private, author = {Stewart, Emily and Baker, Jim}, title = {{Private Equity: The Metastasizing Disease Threatening Health Care}}, publisher = {Private Equity Stakeholder Project}, year = {2023}, month = dec, url = {https://pestakeholder.org/news/private-equity-the-metastasizing-disease-threatening-health-care/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }