Housing rights activists and tenants protest evictions and the poor condition of their apartments outside the offices of landlord Broadway Capital in Chelsea, Massachusetts on April 25, 2022.
Brian Snyder | Reuters
For many years, Conemaugh Health System, a hospital chain in west-central Pennsylvania, has been a nonprofit entity, serving patients in the small communities of Johnstown, Hastings, Meyersdale and Roaring Spring. Today, this is a for-profit system partly owned by Apollo Global Management, one of the largest private equity firms in the United States.
Since an ownership change in 2018, which includes a hospital chain known as LifePoint Health, care at the health system has declined, three patients say. One of them is Paul Ritchie, 53, who works in group homes for the mentally disabled and, in his spare time, edits the Johnstown-based Allegheny Independent Media, “a minimalist website for news and analysis about Pennsylvania's Allegheny area.” He calls her. Recently, he and his father faced all-night waits in the emergency department and had difficulty reaching someone who could answer billing questions, he said.
He told NBC News that the involvement of a large New York City-based private equity firm in Conemaugh was not well known when it happened. “The same people were there in the hospital,” he said. “I didn't know the care would be different.”
Like many U.S. consumers, Ritchie is beginning to recognize the impact that private equity firms like Apollo can have on health care. Over the past decade, these companies have spent $1 trillion acquiring health care companies across the country, usually saddled with debt in hopes of selling them at a gain in three to five years. Critics say the drive to profit from acquisitions of nursing homes, hospitals, physician practices and health care staffing companies conflicts with diligent patient care, and the companies and their purchases are under intense scrutiny from lawmakers, antitrust enforcers and patients.
For example, LifePoint Health is one of the subjects of two Senate investigations that have focused on whether financial deals like the company's could harm patients. Apollo and LifePoint said they welcomed the audit. Conemaugh did not respond to an email seeking comment.
In recent years, private equity firms have captured large swaths of the country's economy, extending far beyond health care. These purchases have included supermarkets, child care, senior living centers, fast food operations, rental housing and pet care providers. Consumers often don't realize that private equity firms own the companies they sponsor, because the companies don't put their names on the market. Nursing homes, hospitals, veterinary practices and residential buildings they own
But their involvement in different industries can be broad – for example, NBC News recently estimated that 40% of the country's emergency departments were run by staffing firms owned by private equity firms. By 2030, according to recent MetLife estimates, private equity-backed companies may own 40% of the country's single-family homes, purchases that in many areas have already driven up housing costs for local renters, academics say.
New research by the Private Equity Stakeholders Project, a nonprofit group that advocates for greater transparency and regulation of the industry, aims to help consumers, lawmakers and regulators determine where private equity firms dominate in four key economic areas: health care, housing, jobs and the private sector. pensions. This analysis, called the State Private Equity Risk Index, breaks down private equity firms' involvement in those areas in all 50 states.
For example, Arizona and Georgia rank high on the list of housing risks associated with heavy private equity purchases of rental housing; New Mexico and West Virginia rank high in payer-dominated health care operations. The study reports that Alabama and Massachusetts have a high impact on workers and jobs, while Washington, Louisiana and Michigan rank high in pension risks due to private equity investments.
The index shows “private equity threats in our own backyard and gives state leaders the tools to protect the people they serve,” said Chris Noble, policy director at the Private Stakeholders Project. Equity Investments We empower communities, working families and policymakers to advocate for change and protect their countries from threats posed by unregulated private equity firms.
More falls and infections
The US Investment Council, the lobbying organization for the private equity industry, says acquisitions by its members improve the sectors in which they invest. This includes health care, he says. “Private equity investments continually support quality, affordable health care for patients across America,” the council wrote in a recent letter to federal regulators.
However, independent academic research has found 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 mortality rates, and another study showed that patients in corporate-owned hospitals experienced more adverse events, including greater numbers of falls and more injuries.
The state's new risk index shows that only 3.2% of hospitals in Pennsylvania are controlled by private equity firms, far below the roughly 25% of hospitals in New Mexico controlled by private equity. But the post-discharge readmission rate among Pennsylvania hospitals is 5% higher than the national average, the risk index says.
Although private equity involvement in health care in Pennsylvania is relatively low, the state has seen significant problems associated with some hospital takeovers by the industry in recent years. Consider Crozer Health, a beleaguered four-hospital system near Philadelphia, part of Prospect Medical Holdings. Prospect owns 16 safety-net hospitals — those that serve low-income patients typically covered by Medicaid — in four states, and was backed by the private equity firm Leonard Green & Partners from 2010 to 2021. It is struggling under a heavy debt burden, many said. employees told NBC News that Crozer failed to pay its vendors and shut down services; Prospect and Crozer are being sued by the Delaware County Foundation, a community foundation created in 2016 when Prospect bought the health system.
Frances Sheehan is president and CEO of the foundation, which monitors Prospect's management of Crozer to ensure it meets the terms of the agreement. “We are the only entity that can hold Prospect accountable,” Sheehan said in an interview. “Prospect has swooped in and bought up health systems in Rhode Island, Connecticut, Pennsylvania and California, and its goal is to drain as much of the system as possible under the guise of changing health systems.”
Even with Crozier's decline, Leonard Green and Prospect's minority investors pocketed $650 million in dividends and fees before selling it in 2021, according to research by the Private Equity Stakeholder Project. Prospect Medical is also among the companies under investigation by Senator Sheldon Whitehouse, as reported by NBC News.
“Everyone just wants to leave Prospect and give us a chance to rebuild,” said Peggy Malone, a behavioral health nurse at Crozer-Chester Medical Center and president of the Crozer-Chester Nurses Association. She testified before the Senate about Prospect's impact on her hospital, where she worked for 36 years.
“The plaster is crumbling, the air conditioning is not always working, the quality of supplies is terrible, and the equipment is broken,” she said. “It was a really vibrant hospital – and watching it diminish really breaks my heart.”
A Crozier spokeswoman did not respond to a request for comment. Prospect agreed in February to try to sell Crozer to a nonprofit in the coming months, pausing litigation with the Delaware County corporation.
Neither Prospect nor Leonard Green responded to requests for comment.
“in suffocation”
In metro Atlanta's five core counties, private equity-backed companies and other real estate owners have acquired more single-family homes than any other area in recent years, said Taylor Shelton, an assistant professor of geosciences at Georgia State University. . He conducted extensive research on large corporate realtors and found that in Fulton County alone, the number of single-family homes owned by these landlords has more than doubled to 6,429 in 2023, up from 3,169 in 2018.
“It's a matter of crowding out potential homebuyers, and the impacts on renters range from raising rents, filing to evict as soon as possible, to often neglecting maintenance in a number of ways,” he said in an interview. “Georgia has arguably the worst landlord-tenant laws of any state in the United States. We have basically no formal protections written into law. Municipalities have been deprived of control over this, which is why these companies invest here.”
Renters have endured significant rent increases in Atlanta, according to Alison Johnson of the Housing Justice League, an Atlanta nonprofit group that organizes renters and provides eviction advocacy services. “They put us in trouble,” she said. “They've bought so many houses here, they can manage the market. They have to tell us the exact rents in the areas where they've taken up all the housing.”
The PESP State Risk Index shows that about 17% of homes across Georgia were purchased by medium, large and large investors, up 62% since 2018. Arizona and Nevada are also magnets for private equity and corporate real estate owners. The index indicates that these investors purchased about 13.8% of homes in Arizona, an increase of 79% from 2018. The state of Nevada saw an increase in the properties of these investors by 83% since 2018; Their share now stands at 13.1%.
As for the impact of private equity on jobs, Massachusetts ranks highly, with 9% of the private sector workforce working for these financiers, according to the PESP state index. That's up about 20% since 2018. Massachusetts is also among the 10 states with the highest number of employee deaths or hospitalizations at employers controlled by private equity firms — 91 between 2018 and 2022 — as a share of its total private investment. The workforce in the sector.
“The Private Equity Stakeholder Project’s new State Risk Index is a sharp tool in the fight for private equity accountability,” Sen. Elizabeth Warren, D-Mass., said in a statement. “Together, we take on this giant trillion-dollar industry that harms workers and sucks money out of the rest of the economy.”
