Two Senate budget committee members have opened a bipartisan investigation into the effects of private equity ownership of hospitals.
The senators sent letters to the CEOs of Leonard Green & Partners, Prospect Medical Holdings, Medical Properties Trust, Apollo Global Management, Brentwood, Tenn.-based Lifepoint Health, and Ottumwa Regional Health Center, a for-profit Iowa hospital, inquiring about "questionable" financial transactions that may have impacted the quality of care at facilities under private equity ownership.
Since coming under private equity ownership, several hospitals have experienced worsened care and high staff turnover, according to a Dec. 7 press release from the Senate Committee on the Budget.
The senators are requesting documents and detailed answers about related-party transactions and the degree to which the private equity firms are calling the shots at these hospitals.
"As private equity has moved into health care, we have become increasingly concerned about the associated negative outcomes for patients," Senator Sheldon Whitehouse said in the release. "From facility closures to compromised care, it's now a familiar story: private equity buys out a hospital, saddles it with debt, and then reduces operating costs by cutting services and staff — all while investors pocket millions. Before the dust settles, the private equity firm sells and leaves town, leaving communities to pick up the pieces."
Nearly 60% of physicians believe that nonphysician ownership of practices results in a lower quality of patient care, according to a survey from NORC at the University of Chicago. Only 18% of respondents believe that corporate ownership of medical practices has improved quality of care.
Physicians cited decreased time with patients and a greater focus on financial success as the top issues negatively impacting the quality of corporate-owned practices.
While the committee is currently investigating private equity ownership of hospitals, the ASC space may come next due to an uptick in private equity interest.
"It's not about now, but more of 'as we are heading to.' Why? Due to excessive regulation and monopolies, independent healthcare providers will vanish. Private equity will continue the takeover alongside hospitals. Health insurance will continue to pay less. The shortage of medical professionals … the future is not bright with what is going on today," Jose Rivera, administrator at Tri-County Heart Institute in The Villages, Fla., told Becker's.