How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag

The report details the ownership of Prospect Medical Holdings by Leonard Green & Partners from 2010 to 2021, alleging that the firm used dividend recapitalizations and sale-leaseback transactions to siphon $658 million in fees and dividends. This financial extraction occurred while Prospect hospitals suffered from low quality ratings, staffing shortages, and severe financial losses, eventually leading to service cuts and facility closures in states like Pennsylvania and Texas. The document argues that Leonard Green exited its majority stake in 2021, leaving the hospitals with substantial liabilities and diminished resources.

• Between 2010 and 2021, Leonard Green & Partners and minority owners extracted approximately $658 million in fees and dividends from Prospect Medical Holdings, often by loading the company with debt through dividend recapitalizations.
• In 2018, Prospect paid a $457 million dividend to its owners despite generating a $244 million net loss that year and having previously assured Rhode Island regulators it did not intend to make additional dividend distributions.
• To pay off $1.1 billion in debt used to fund dividends, Prospect engaged in sale-leaseback transactions, selling its hospital real estate to Medical Properties Trust (MPT) and replacing assets with lease liabilities.
• Despite claims by Leonard Green that Prospect was 'well-capitalized,' financial records showed that as of September 30, 2020, total liabilities exceeded total assets by $1.06 billion, and a large portion of its cash consisted of Medicare Advance CARES Act loans.
• Under Leonard Green's ownership, Prospect hospitals experienced significant quality and operational failures, including low CMS quality ratings, 'immediate jeopardy' conditions in Connecticut, and gross negligence charges in California due to mold contamination in a pharmacy.
• Following Leonard Green's exit in June 2021, Prospect's Crozer Health system in Pennsylvania implemented major service cuts in 2022, including laying off hundreds of workers and shutting down maternity and hospice units.

APA

O’Grady, E. (2022). How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf

Chicago

O’Grady, Eileen. How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag. Private Equity Stakeholder Project, 2022. https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf.

Wikipedia

{{cite report |last1=O’Grady |first1=Eileen |title=How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag |publisher=Private Equity Stakeholder Project |date=November 2022 |url=https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2022how, author = {O’Grady, Eileen}, title = {{How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag}}, institution = {Private Equity Stakeholder Project}, year = {2022}, month = nov, url = {https://pestakeholder.org/wp-content/uploads/2022/11/Prospect_Primer_Nov-2022.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }