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John R. Fischer, Senior Reporter | January 24, 2024
A new report says that Apollo Global Management has degraded care services at the more than 220 hospitals it owns in 36 states.
In its first report since launching its investigation into the effects of private equity ownership on hospitals, the Senate Budget Committee accuses Apollo Global Management, the second-largest private equity firm in the U.S., of degrading care and operational quality through service cuts, layoffs, and other actions at the 220 hospitals it operates in 36 states.
The report, Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers, pays special attention to conduct at two reputable American hospitals, Lifepoint Health, which Apollo acquired in 2018, and ScionHealth, which it spun off in 2021. Investigators in the inquiry, known as the Private Equity Stakeholder Project (PESP), say that Apollo's actions put both providers in substantial debt and subjected them to high credit risk.
They also allege that Apollo has put patients and healthcare workers at rural hospital chains at risk and completed questionable transactions that raise concerns about anti-competitive practices, including a complex spinoff as part of its acquisition of Kindred Healthcare, in Seattle, to evade antitrust scrutiny.
PESP Healthcare director Eileen O'Grady told HCB News that the report emphasizes the committee's view that the main priority among PE firms like Apollo is to maximize short-term profits over the needs of patients, hospital facilities, and healthcare workers.
"States should increase oversight over changes in ownership or control of hospitals, including pursuing policies that allow regulators to impose conditions on changes in control, such as requiring capital commitments, limiting the sale of real estate, and prohibiting extractive financial policies, such as management fees and debt-funded dividends," she said.
Senators Chuck Grassley (R.-Iowa) and Sheldon Whitehouse (D-RI)
launched their bipartisan inquiry in December to assess how acquisitions by private equity firms affect hospital finances, operations, and care quality. Their decision was motivated by questionable financial transactions allegedly connected to adverse events at Ottumwa Regional Health Center, an Iowa hospital in which both Apollo and Lifepoint have ownership interests.
More transparency needed
While critics have long argued that private equity ownership leads to higher prices for patients, more debt for hospitals, and lower quality care, evidence supporting these claims is not as simple.
When the investigation first launched, HCB News spoke with Rachel Werner, executive director of the Leonard Davis Institute of Health Economics and a professor at the University of Pennsylvania. While acknowledging that growing evidence supports the idea that private equity ownership leads to consolidated markets, causing loss of competition and increased pricing, she says that studies suggesting that it leaves hospitals in debt and has negative financial impacts on operations are mixed.
