HOW PRIVATE EQUITY RAIDED SAFETY NET HOSPITALS

The report details how Pipeline Health, backed by firms including Stanton Road Capital, Davidson Kempner Capital Management, and Deerfield Management, utilized sale-leaseback transactions and complex subsidiary structures to monetize hospital real estate. It highlights the closure of Westlake Hospital in Illinois, which occurred despite promises to regulators, and the sale of Weiss Memorial Hospital's parking lot for luxury housing. The document concludes that these practices led to Pipeline's own Chapter 11 bankruptcy in 2022 and recommends stricter state and federal oversight of private equity acquisitions of safety net hospitals.

• Pipeline Health utilized sale-leaseback transactions to monetize hospital real estate, generating $238 million from sales in California and Texas to Medical Properties Trust and Global Medical REIT, which left hospitals with large monthly lease payments.
• In Chicago, Pipeline sold the parking lot of Weiss Memorial Hospital to Lincoln Property Company for a reported $12 million to facilitate the construction of a 314-unit luxury apartment complex, despite significant community opposition.
• Pipeline acquired Westlake Hospital in January 2019 and announced its closure shortly after, violating assurances made to regulators that the facility would remain open for at least two years.
• Bankruptcy proceedings revealed that the closure of Westlake Hospital by June 5, 2019, was a specific condition of the acquisition agreement between Pipeline and Tenet Healthcare, a fact not disclosed to regulators.
• Pipeline Health's ownership structure is described as opaque and convoluted, utilizing over two dozen subsidiaries and holding companies to shield investors and protect assets.
• Pipeline Health filed for Chapter 11 bankruptcy in October 2022 in the Southern District of Texas, reporting a total net loss of $271.55 million for the 12-month period ending in August 2022.
• The report identifies a pattern of 'looting' safety net hospitals by private equity, comparing Pipeline's actions to those of Leonard Green & Partners with Prospect Medical Holdings and Joel Freedman with Hahnemann Hospital.
• Pipeline's founders, Nick Orzano and Mark Bell, were involved in a $8.1 million settlement with the federal government in December 2018 regarding alleged False Claims Act violations involving illegal payments for referrals at Avanti Hospitals.

APA

Bugbee, M. (2023). HOW PRIVATE EQUITY RAIDED SAFETY NET HOSPITALS. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2023/08/PESP_Report_PipelineHealth_2023.pdf

Chicago

Bugbee, Mary. HOW PRIVATE EQUITY RAIDED SAFETY NET HOSPITALS. Private Equity Stakeholder Project, 2023. https://pestakeholder.org/wp-content/uploads/2023/08/PESP_Report_PipelineHealth_2023.pdf.

Wikipedia

{{cite report |last1=Bugbee |first1=Mary |title=HOW PRIVATE EQUITY RAIDED SAFETY NET HOSPITALS |publisher=Private Equity Stakeholder Project |date=July 2023 |url=https://pestakeholder.org/wp-content/uploads/2023/08/PESP_Report_PipelineHealth_2023.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bugbee2023how, author = {Bugbee, Mary}, title = {{HOW PRIVATE EQUITY RAIDED SAFETY NET HOSPITALS}}, institution = {Private Equity Stakeholder Project}, year = {2023}, month = jul, url = {https://pestakeholder.org/wp-content/uploads/2023/08/PESP_Report_PipelineHealth_2023.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }