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Private Equity is Harming Healthcare

Peter Goodman is a commentator based in Las Cruces, New Mexico.
Courtesy photo.
Peter Goodman is a commentator based in Las Cruces, New Mexico.


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’s 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.

Peter Goodman's opinions are his own and do not necessarily reflect the views of KRWG Public Media or NMSU.