Private Equity Is Harming Healthcare -- and Owns Memorial Medical Center

I first visited Memorial Hospital in Las Cruces in 1969, when it was still a small, city/county owned hospital downtown. A Hill-Burton public hospital. This two-part column is my warning to the City and County that maybe we aren’t well-served by Memorial Medical Center, under private equity ownership, and that things will very likely get worse, particularly if we are not vigilant.

Neither what I hear on the ground in Las Cruces nor increasing national scrutiny of hospitals owned by private-equity firms bodes well. Two senior U.S. Senators recently launched an investigation of Apollo Global Management, which owns Lifepoint Health, which owns MMC. Locals say they experienced a stronger “profits over patients” attitude after Apollo’s purchase.

Sophisticated private-equity firms acquire hospitals or other medical-service entities and go to extremes to milk whatever funds they can from the hospitals, while minimizing services and jacking up costs. Often they fund the acquisition by burdening the hospital companies with huge debts. That can bankrupt hospitals. Owners may cut expenses by firing people and closing important departments that aren’t highly profitable. They also find ways to increase costs or make money by doing unnecessary procedures.

Such firms have bought out more than two hundred hospitals. Experts estimate that 40% of hospital emergency departments in the U.S. are managed by entities such firms own.

Senate Budget Committee Ranking Member Chuck Grassley and Chair Sheldon Whitehouse are investigating how private equity ownership impacts our nation’s hospitals. They wrote Apollo regarding “the horrific events” in a Lifepoint health center in 2021-2022 “where at least nine female patients were sexually assaulted while sedated by a now-deceased nurse practitioner who overdosed and died at the facility.” They inquired about a dizzying series of “questionable” mergers, acquisitions, and transactions by Apollo.

Studies had long shown that senior living facilities owned by private equity firms have higher death rates and inferior patient well-being.

A recent study compared Medicare claims for patients at 51 acute-care hospitals owned by private-equity firms with data at 259 similar-sized hospitals in the same areas that weren’t owned by such firms. 

They  studied a period from three years before a hospital’s acquisition by private equity to three years after, between 2010 and 2017. Soon after private equity firms took over, patients experienced about a 25% increase in infections, falls, and other hospital–acquired conditions, compared with patients elsewhere. Although overall numbers of surgeries declined, patients also got twice the previous rate of infections from surgery, even though numbers of surgeries declined.

The FTC recently sued a private-equity firm for allegedly plotting for ten years to gain a monopoly on anesthesia practices in Texas, then use it to charge patients unreasonably high prices.

Grassley has said that, with hospitals, "a business model that prioritizes profits over patient care and safety is unacceptable.” A Berkeley study concluded, “The private equity business model is fundamentally incompatible with sound healthcare that serves patients.”

Some local sources suggest that MMC may be proving that.

Interviews with present and former MMC personnel paint a sad picture. Non-public hospitals need to make profits; but observers say that MMC management, since Apollo took over, has even more extremely prioritized maximum profits over everything else, including patient safety, collegial oversight, and avoiding medicare fraud. They say that’s cost us some wonderful doctors, a hospital culture of cooperating to manage the best possible patient care and safety, and probably lives.

Part II will explore the local situation.

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[The above column appeared Sunday, 28 January, 2024, in the Las Cruces Sun-News and [should soon be] on the newspaper's website, as well as on KRWG’s website under Local Viewpoints.] A shortened and sharpened radio commentary version will air during the week on KRWG (90.1 FM) and on KTAL-LP (101.5 FM, streaming at http://www.lccommunityradio.org/).]

[Locally, I began to hear concerns from the medical community about certain events, situations, decisions, and incidents at MMC, some tying the problems to Apollo’s acquisition of Lifepoint, MMC’s parent company; meanwhile, a marvelous Pulitzer Prize-winning journalist, Gretchen Morgenson, was publishing excellent articles on the national situation discussed above: private equity firms, as a group, are making huge profits by doing tremendous harm to our health centers and hospitals. As some had told me happened here, the usual tension between maximizing profits and optimizing patient care, an inherent problem in non-public hospitals, was getting way out of whack. Next week’s column will opine on the local situation. I am hoping to hear the MMC administration’s views in the meantime. Previously public aspects of the problem include MMC’s violation of its contract with city and county regarding mental health services and allegations by Yoli Diaz and others that MMC is also out of contract [and inhumane] with regard to indigent cancer patients and others. My opinion is as stated above. Other sources worth consulting are: Senators Probe Private Equity on Health Care , White House, Senate Take Aim at "Corporate Greed in Healthcare and perhaps https://www.nytimes.com/2018/02/28/business/jared-kushner-apollo-citigroup-loans.html.]

[Gotta say more about Gretchen Morgenson: first, from what I know, her articles are incisive, well-written, and right-on; second, I’d read good reviews of her latest book, These Are the Plunderers, co-written with Joshua Rosner, and have started reading it; and, third, part of the reason [for me] to read it soon is that she’ll be here in February, speaking as well as visiting with a long-time friend of hers here. Since she’s kindly agreed to gab with us for an hour on our radio show, “Speak Up, Las Cruces!” on KTAL, [either 8:30-9 or 9-10 on 21 February], I’d better start preparing to ask halfway sensible questions and pretend I know stuff. We’re looking forward to her visit! (Here’s the Publisher's Weekly bit on Plunderers, and if you google her name plus Apollo or health, you’ll acquire links to a bunch of interviews she’s done, or she and her co-author have done, with NPR and anyone else who’s paying attention.)

As you might sense, part of our problem is a national shift [not only in healthcare] from the local, human, and reasonable to everything being run by some financial people sufficiently far away not to give a shit about your or me. It’s like the change that surprised Americans in the late 19^th Century, and led to a strong progressive effort to control trusts and monopolies and force ‘em to pay at least lip service to human health, purity, and honesty. J.P. Morgan and Harriman and Rockefeller were wealthy to a degree [when compared to the average citizen] unimaginable to Jefferson and Madison. Now out billionaires and even, recently, trillionaires are obscenely wealthy compared to any of us, and probably the difference is way more outlandish than at any earlier moment.  (Interestingly, Blogger's spell-check had no problem with "billionaires" but is advising me that "trillionaires" is a non-word or misspelling.  So maybe I was wrong, and we're about to have our first trillionaires.)

Result? McDonalds doesn’t much care how its meat affects you, unless something happens that’s so bad it’ll impact a significant portion of customers. It’s particularly sad to see health care go that route. I can read stuff and avoid particular food vendors, but I likely have no meaningful alternative to my local hospital; and whereas I know the folks who make my clothes, tools, furniture, and other things are doing it for the money, and not for my health except as the law may require, I tend to imagine my doctors and nurses feel differently. Fact is, they mostly do; but those they work for are squeezing them inhumanely, and in effect punishing them for taking extra time and care with me – or pushing them to con me into some lucrative but unnecessary step they can overbill Medicare and me for. And even punishing them for doing the kinds of quality control efforts that used to be standard.  We're a long ways from the post-WWII era when the nation thought having non-profit hospitals in areas like ours made sense, and the Hill-Burton Act made that happen.  (Yep, our city/county-owned Memorial Hospital was one.)  Big picture? We have one of the world’s most costliest health care systems and one of the developed world’s worst! Why should Switzerland, Sweden, Germany, Japan, Norway, Singapore, Australia, and the Netherlands – and others – have such better systems than we do, when our country (or, at least, its wealthy citizens) have so much more wealth than most countries?]

[PS: Greg Lennes just responded to the column by sending me a link to a group that keeps a watch on private equity health care ownership, and I noticed this piece on "News Coverage of Apollo's Stranglehold on Hospitals". Thanks, Greg! Thanks, Gretchen! Thanks, CL!]