Testimony for the Senate Democratic Policy Committee Hearing: Healthcare Accessibility and Hospital Closure Impacts

The Private Equity Stakeholder Project (PESP) testifies that private equity firms use extractive financial tactics—such as high leverage, sale-leasebacks, and debt-funded dividends—to maximize returns, often resulting in the bankruptcy or closure of hospitals. The document highlights specific cases including Prospect Medical Holdings, Steward Health Care, and Apollo Global Management's Lifepoint/ScionHealth, noting severe impacts on patient safety and staffing. PESP proposes state-level policy solutions including stricter merger reviews, financial transparency, anti-looting measures, and joint and several liability for investors.

• Private equity firms employ specific financial tactics to extract value from healthcare providers, which can divert funds from operations and increase the risk of bankruptcy. These include 'leveraged buyouts' using high debt, 'sale-leaseback' transactions where real estate is sold and leased back, 'dividend recapitalizations' that use new debt to pay owners, 'roll-ups' that consolidate providers and increase prices, and the charging of 'management or advisory fees'.
• Private equity ownership is strongly linked to healthcare bankruptcies. In 2024, 21% of healthcare bankruptcies involved private equity-owned companies, and 88% of the largest bankruptcies (liabilities over $500 million) were at companies with a history of private equity ownership.
• In Pennsylvania, private equity investment has been associated with the closure of three hospitals: Hahnemann University Hospital (2019), Delaware County Memorial Hospital (2022), and Sharon Regional Medical Center (2025). Additionally, the Crozer Health system has experienced significant financial distress and service reductions following private equity ownership.
• The case of Steward Health Care, owned by Cerberus Capital Management, illustrates the risks of the private equity model. The system reported over $9 billion in liabilities upon filing for Chapter 11 bankruptcy in May 2024, with $6.6 billion in long-term lease liabilities. Investigations found a pattern of understaffing and equipment issues from 2019 to 2024 that resulted in at least 15 patient deaths and 16 injuries.
• Prospect Medical Holdings, owned by Leonard Green & Partners from 2010 to 2021, extracted at least $658 million in dividends and fees despite operating challenges. This led to severe staffing shortages and quality issues, including a 2019 shutdown of all facilities in San Antonio and the effective closure of Delaware County Memorial Hospital in November 2022 due to staffing failures.
• Apollo Global Management controls approximately 220 hospitals across 36 states through Lifepoint Health and ScionHealth. Regulatory scrutiny has revealed 'immediate jeopardy' designations at Lifepoint's Wilson Medical Center in North Carolina and high readmission rates at facilities in Virginia, New Mexico, and North Carolina.
• Private equity firms are increasingly using joint ventures with non-profit health systems to expand and potentially evade antitrust scrutiny. Examples include Lifepoint Health's partnership with Duke Health (14 hospitals) and Compassus Health's partnerships with OhioHealth and Providence Health.
• PESP recommends several policy interventions for Pennsylvania, including: robust merger review for all private equity transactions; mandatory annual audited financial disclosures for operators and investors; bans on debt-funded dividends and limits on sale-leasebacks; joint and several liability for corporate owners; and state-mandated minimum staffing ratios.

APA

Bugbee, M. (2024). Testimony for the Senate Democratic Policy Committee Hearing: Healthcare Accessibility and Hospital Closure Impacts. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2025/03/PESP-Testimony-Senate-Policy-Committee-Hearing-3.10.25.pdf

Chicago

Bugbee, Mary. Testimony for the Senate Democratic Policy Committee Hearing: Healthcare Accessibility and Hospital Closure Impacts. Private Equity Stakeholder Project, 2024. https://pestakeholder.org/wp-content/uploads/2025/03/PESP-Testimony-Senate-Policy-Committee-Hearing-3.10.25.pdf.

Wikipedia

{{cite press release |last1=Bugbee |first1=Mary |title=Testimony for the Senate Democratic Policy Committee Hearing: Healthcare Accessibility and Hospital Closure Impacts |publisher=Private Equity Stakeholder Project |date=10 March 2024 |url=https://pestakeholder.org/wp-content/uploads/2025/03/PESP-Testimony-Senate-Policy-Committee-Hearing-3.10.25.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{bugbee2024testimony, author = {Bugbee, Mary}, title = {{Testimony for the Senate Democratic Policy Committee Hearing: Healthcare Accessibility and Hospital Closure Impacts}}, publisher = {Private Equity Stakeholder Project}, year = {2024}, month = mar, url = {https://pestakeholder.org/wp-content/uploads/2025/03/PESP-Testimony-Senate-Policy-Committee-Hearing-3.10.25.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }