Housing rights activists and tenants protest against evictions and the poor condition of their apartments outside the offices the owner Broadway Capital in Chelsea, Massachusetts on April 25, 2022.
Brian Snyder | Reuters
For a few years, Conemaugh Health System, a hospital chain in west central Pennsylvania, was a nonprofit entity, serving patients within the small communities of Johnstown, Hastings, Meyersdale and Roaring Spring. Today, it’s a for-profit system owned partially by Apollo Global Management, one in all the most important private-equity firms in the USA.
Since that ownership change in 2018, involving a hospital chain often known as LifePoint Health, care on the health system has declined, three patients say. One is Paul Ricci, 53, who works at group homes for the intellectually disabled and in his spare time edits the Johnstown-based Allegheny Independent Media, “a non-fluff website for news and evaluation of the Allegheny Region of Pennsylvania,” as he calls it. Recently, he said, he and his father have experienced overnight waits within the emergency department and have had trouble getting through to someone who can answer billing questions.
That a giant, Latest York City-based private-equity firm had stepped in at Conemaugh wasn’t well-known when it happened, he told NBC News. “The identical people were there on the hospital,” he said. “I didn’t know the care can be different.”
Like many U.S. consumers, Ricci is starting to study the impact that private-equity firms like Apollo can have on health care. Over the past decade, these firms have spent $1 trillion taking on health care corporations across the nation, typically loading them with debt and hoping to sell them at a gain in three to 5 years. Critics say the drive to benefit from the acquisitions of nursing homes, hospitals, physician practices and health care staffing corporations conflicts with diligent patient care, and the firms and their purchases are coming under heightened scrutiny from legislators, anti-trust enforcers and patients.
LifePoint Health, for instance, is one in all the topics of two Senate inquiries focused on whether financial deals like the corporate’s could also be harming patients. Apollo and LifePoint have said they welcome the scrutiny. Conemaugh didn’t reply to an email searching for comment.
Lately, private-equity firms have taken over broad swaths of the nation’s economy, extending well beyond health care. These purchases have involved supermarkets, child care, senior living centers, fast food operations, rental housing and pet care providers. Consumers are sometimes unaware that private-equity firms own the businesses they patronize since the firms don’t put their names on the nursing homes, hospitals, veterinary practices and apartment buildings they own.
But these firms’ involvement in numerous industries may be extensive — for instance, NBC News recently estimated that 40% of the nation’s emergency departments were operated by staffing corporations owned by private-equity firms. And by 2030, based on a recent MetLife estimate, corporations backed by private equity may own 40% of the nation’s single-family homes, purchases that in lots of regions have already driven up housing costs for local renters, academics say.
Latest research by Private Equity Stakeholder Project, a nonprofit group that advocates for more transparency and regulation of the industry, goals to assist consumers, legislators and regulators discover where private-equity firms dominate in 4 key economic areas: health care, housing, jobs and pensions. The evaluation, called the Private Equity State Risk Index, details private equity’s involvement in those arenas in all 50 states.
Arizona and Georgia, for instance, rank high on the list for housing risks related to heavy private-equity purchases of rental homes; Latest Mexico and West Virginia place high for health care operations dominated by the financiers. Alabama and Massachusetts have an elevated impact on employees and jobs while Washington state, Louisiana and Michigan rank high in pension risk due to investments in private equity, the research states.
The index shows “the private equity threats in our own backyard and provides state leaders the tools to guard the people they serve,” said Chris Noble, policy director at Private Equity Stakeholder Project. “By providing transparent data on the risks related to private equity investments, we empower communities, working families, and policymakers to advocate for change and protect their states from the threats posed by unchecked private equity firms.”
More falls and infections
The American Investment Council, the lobbying organization for the private-equity industry, says its members’ acquisitions improve the sectors they spend money on. This includes health care, it says. “Private equity investments consistently support quality, inexpensive health look after patients across America,” the council wrote in a recent letter to federal regulators.
Independent academic research, nonetheless, has determined that private-equity ownership of nursing homes, hospitals and physician practices can harm patients. One study showed that residents of nursing homes owned by private equity experienced 10% greater death rates and one other showed that patients at hospitals owned by the firms experienced more opposed events, including greater numbers of falls and much more infections.
Only 3.2% of hospitals in Pennsylvania are controlled by private-equity firms, the brand new state risk index shows, far below the just about 25% of hospitals in Latest Mexico controlled by private equity. However the readmission rate after discharge amongst those Pennsylvania hospitals is 5% higher than the national average, the chance index says.
Though private equity’s involvement in Pennsylvania health care is comparatively low, the state has experienced high-profile problems related to some hospital takeovers by the industry lately. Consider Crozer Health, an embattled four-hospital system near Philadelphia that is a component of Prospect Medical Holdings. Prospect owns 16 safety net hospitals — those serving low-income patients often covered by Medicaid — in 4 states and was backed by private-equity firm Leonard Green & Partners from 2010 until 2021. Struggling under a heavy debt load, Crozer has didn’t pay its vendors and shuttered services, several employees told NBC News; Prospect and Crozer have been sued by The Foundation for Delaware County, a community foundation created in 2016 when Prospect bought the health system.
Frances Sheehan is the president and CEO of the muse, which monitors Prospect’s management of Crozer to make sure it lives as much as the terms of the agreement. “We’re the one entity that may hold Prospect accountable,” Sheehan said in an interview. “Prospect has swooped in and purchased health systems in Rhode Island, Connecticut, Pennsylvania and California, and their goal is to empty as much from the system as possible under the guise of turning the health systems around.”
At the same time as Crozer declined, Leonard Green and minority investors in Prospect extracted $650 million in dividends and charges before selling it in 2021, based on research by Private Equity Stakeholder Project. Prospect Medical can be amongst the businesses under investigation by Sen. Sheldon Whitehouse, D-R.I., as NBC News has reported.
“Everybody just wants Prospect to go away and provides us a likelihood to rebuild,” said Peggy Malone, a behavioral health nurse at Crozer-Chester Medical Center and president of Crozer Chester Nurses Association. She has testified before the Senate on the impact Prospect has had on her hospital, where she’s worked for 36 years.
“The stucco is crumbling, the air-con doesn’t at all times work, the standard of supplies is horrendous and the equipment is broken,” she said. “It was a very vibrant hospital — to look at it dwindle away truly breaks my heart.”
A Crozer spokeswoman didn’t reply to a request for comment. Prospect agreed in February to attempt to sell Crozer to a nonprofit in the approaching months, pausing the litigation with The Foundation for Delaware County.
Neither Prospect nor Leonard Green responded to requests for comment.
‘In a chokehold’
Within the five core counties of metropolitan Atlanta, private-equity-backed corporations and other large corporate landlords have taken over more single-family homes than in another region lately, said Taylor Shelton, an assistant professor of geosciences at Georgia State University. He has done extensive research on large corporate landlords, finding that in Fulton County alone, the inventory of single-family homes owned by these landlords greater than doubled to six,429 in 2023, up from 3,169 in 2018.
“It’s a difficulty of crowding out potential homebuyers, and the consequences on tenants go from raising rents, filing for eviction as soon as they will to often neglecting maintenance in a wide range of ways,” he said in an interview. “Georgia has arguably the worst landlord-tenant laws of any state within the U.S. Now we have essentially no formal protections written within the law. The municipalities have been defanged from having any control over this, which is why these corporations invest here.”
Tenants have endured significant rent increases in Atlanta, based on Alison Johnson of the Housing Justice League, an Atlanta nonprofit group that organizes tenants and provides eviction defense services. “They’ve us in a chokehold,” she said. “They’ve purchased so many homes here, they get to administer the market. They get to inform us what rents are set in areas where they’ve absorbed all of the housing.”
The PESP state risk index shows some 17% of homes across Georgia have been purchased by medium, large and mega-investors, up 62% since 2018. Arizona and Nevada are also magnets for personal equity and company landlords. Some 13.8% of homes in Arizona have been bought by these investors, the index indicates, up 79% from 2018. Nevada has seen these investors’ holdings increase 83% since 2018; their percentage stake now stands at 13.1%.
As for personal equity’s impact on jobs, Massachusetts ranks high, with 9% of the private sector workforce employed by these financiers, the PESP state index reports. That is up almost 20% since 2018. Massachusetts can be amongst 10 states with the very best variety of worker deaths or hospitalizations at employers controlled by private-equity firms — 91 between 2018 and 2022 — as a share of its total private sector workforce.
“The Private Equity Stakeholder Project’s recent state risk index is a razor-sharp tool within the fight to carry private equity accountable,” Sen. Elizabeth Warren, D-Mass., said in an announcement. “Together, we’re taking over this trillion-dollar, behemoth industry that is hurting working people and sucking money out of the remaining of the economy.”