RAIDING THE SAFETY NET

The report details how Leonard Green & Partners acquired Prospect Medical Holdings in 2010 and subsequently extracted between $570 million and $658 million in fees and dividends. This occurred despite a dramatic decline in EBITDA from $142 million in 2015 to $17 million in 2018 and the accumulation of $260 million in unfunded pension liabilities. The document highlights systemic failures, including the complete closure of the Nix Health system in Texas, 'immediate jeopardy' patient conditions in Connecticut, and legal disputes over pensions in Rhode Island and community funding in Pennsylvania. It concludes by urging the Pennsylvania Attorney General to block a change in ownership until Leonard Green returns the extracted funds to support hospitals during the COVID-19 pandemic.

• Since acquiring Prospect Medical Holdings in 2010, Leonard Green & Partners and other owners extracted significant sums in fees and dividends, totaling between $570.44 million and $658 million, despite the company's operational struggles.
• Prospect Medical Holdings experienced a severe decline in financial performance between 2015 and 2018, with EBITDA dropping from $142 million to $17 million and the EBITDA margin falling from 10.8% to 0.6%.
• The company faced substantial pension crises, including $260 million in unfunded retirement benefit obligations as of September 2018 and a class action lawsuit in Rhode Island alleging that Prospect hid the poor health of the pension plan.
• A $457 million dividend paid to owners in 2018 directly violated assurances given to Rhode Island regulators in 2014 that no further dividend distributions were planned.
• Hospital quality and stability deteriorated under private equity ownership, evidenced by the complete closure of the Nix Health system in Texas (resulting in 972 layoffs) and 'immediate jeopardy' citations for hospitals in Connecticut.
• In Pennsylvania, Prospect failed to meet acquisition terms, including a dispute over a $56.6 million commitment to the Crozer-Keystone Community Foundation and unpaid property taxes to a local school district.
• Leonard Green & Partners is exiting its majority stake in Prospect by selling it to management for $10 million to $12 million, a small fraction of the approximately $885 million spent on acquisitions.

APA

O’Grady, E. (2020). RAIDING THE SAFETY NET. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2020/06/Prospect-AG-letter-PA.pdf

Chicago

O’Grady, Eileen. RAIDING THE SAFETY NET. Private Equity Stakeholder Project, 2020. https://pestakeholder.org/wp-content/uploads/2020/06/Prospect-AG-letter-PA.pdf.

Wikipedia

{{cite report |last1=O’Grady |first1=Eileen |title=RAIDING THE SAFETY NET |publisher=Private Equity Stakeholder Project |date=27 May 2020 |url=https://pestakeholder.org/wp-content/uploads/2020/06/Prospect-AG-letter-PA.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2020raiding, author = {O’Grady, Eileen}, title = {{RAIDING THE SAFETY NET}}, institution = {Private Equity Stakeholder Project}, year = {2020}, month = may, url = {https://pestakeholder.org/wp-content/uploads/2020/06/Prospect-AG-letter-PA.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }