Statement for the Record Hearing of the Health, Education, Labor and Pensions Committee's Subcommittee on Primary Health and Retirement Security April 3, 2024 “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk”

The Private Equity Stakeholder Project (PESP) warns that private equity's pursuit of outsized returns in the U.S. healthcare sector leads to 'looting' of hospitals through high leverage, sale-leaseback transactions, and debt-funded dividends. The document provides case studies of firms like Cerberus Capital Management (Steward Healthcare), Leonard Green & Partners (Prospect Medical Holdings), Apollo Global Management (Lifepoint Health and ScionHealth), and Pipeline Health to illustrate how these financial tactics result in reduced access to care, staffing shortages, and declining quality of care. PESP calls for increased regulatory oversight of for-profit hospital mergers and protections against extractive financial maneuvers.

• Private equity firms employ specific financial tactics to extract wealth from healthcare providers, including leveraged buyouts that divert cash to interest payments, sale-leaseback transactions that monetize real estate but increase monthly rent, and dividend recapitalizations where companies take on new debt to pay cash payouts to owners.
• The ownership of Steward Healthcare by Cerberus Capital Management and its relationship with Medical Properties Trust (MPT) led to severe financial distress, including a $1.2 billion sale-leaseback deal used to pay nearly $500 million in dividends to investors. This resulted in critical failures, such as the death of a new mother in January 2024 after a necessary medical device had been repossessed due to nonpayment.
• Leonard Green & Partners extracted at least $658 million in dividends and fees from Prospect Medical Holdings between 2010 and 2021, despite the company facing operating challenges and underfunded pensions. This period saw deteriorating conditions, including 'immediate jeopardy' designations in Connecticut and gross negligence charges in California regarding mold contamination in a hospital pharmacy.
• Apollo Global Management's control of Lifepoint Health and ScionHealth, which together own approximately 220 hospitals across 36 states, has been linked to high readmission rates and reduced access to services. For example, in Riverton, Wyoming, the transfer of services to another facility increased air ambulance utilization from 155 in 2014 to 937 in 2019.
• Pipeline Health, backed by Stanton Road Capital, Davidson Kempner Capital Management, and Deerfield Management, acquired Westlake Hospital in Illinois for $5 million and closed it shortly after, despite promising regulators to keep it open for two years. The investors subsequently sold two other hospitals for $92 million.
• Private equity consolidation extends beyond hospitals into durable medical equipment (DME), behavioral health, disability services, and dentistry. In the dental industry, private equity firms control the majority of the Dental Services Organization (DSO) market, with 27 of the top 30 DSOs being private-equity-owned as of 2021.

APA

O’Grady, E. (2024). Statement for the Record Hearing of the Health, Education, Labor and Pensions Committee's Subcommittee on Primary Health and Retirement Security April 3, 2024 “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk”. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2024/04/April-2024-HELP-written-testimony-FINAL.pdf

Chicago

O’Grady, Eileen. Statement for the Record Hearing of the Health, Education, Labor and Pensions Committee's Subcommittee on Primary Health and Retirement Security April 3, 2024 “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk”. Private Equity Stakeholder Project, 2024. https://pestakeholder.org/wp-content/uploads/2024/04/April-2024-HELP-written-testimony-FINAL.pdf.

Wikipedia

{{cite press release |last1=O’Grady |first1=Eileen |title=Statement for the Record Hearing of the Health, Education, Labor and Pensions Committee's Subcommittee on Primary Health and Retirement Security April 3, 2024 “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk” |publisher=Private Equity Stakeholder Project |date=3 April 2024 |url=https://pestakeholder.org/wp-content/uploads/2024/04/April-2024-HELP-written-testimony-FINAL.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{ogrady2024statement, author = {O’Grady, Eileen}, title = {{Statement for the Record Hearing of the Health, Education, Labor and Pensions Committee's Subcommittee on Primary Health and Retirement Security April 3, 2024 “When Health Care Becomes Wealth Care: How Corporate Greed Puts Patient Care and Health Workers at Risk”}}, publisher = {Private Equity Stakeholder Project}, year = {2024}, month = apr, url = {https://pestakeholder.org/wp-content/uploads/2024/04/April-2024-HELP-written-testimony-FINAL.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }