Yves here. The post below recaps the high points of a report by Senator Chris Murphy on how private equity firm Leonard Green severely degraded patient care severely on its way to bankrupting Prospect Medical Holdings. The document is highly readable (a bit heavy on narrative detail as opposed to data since the study is based on an in-depth look at three Connecticut facilities. Please do find the time to give it at least a skim here. A representative
The looting of hospitals is only one aspect of private equity’s destructive health care rentierism, but it’s particularly devastating to communities that had these facilities as anchors of care. Forgive me for not running down all of the pre and post bankruptcy hospital closures, but this extract from a June story in Pennsylvania Capital-Star gives a feel:
A California for-profit health care company said Monday it plans to close its remaining hospitals in Pennsylvania’s fifth most populous county and fire thousands of employees after failing to find a buyer.
Prospect Medical Holdings filed papers Monday in bankruptcy court seeking approval to close the two Crozer Health System hospitals in Delaware County before they run out of cash. The announcement was met with condemnation from state and local officials, who had provided a $40 million lifeline while the company worked to reach a solution to keep them open.
“Prospect’s decision to move forward with the closure of the Crozer Health System is a devastating and disgraceful blow to our communities, our healthcare workers, and every patient who has ever relied on our local hospital system,” state lawmakers from Delaware County said in a joint statement Monday. “Yet again, Prospect decided to put profits over patients by putting Crozer’s assets up for auction.”
The closures will affect Crozer Chester Medical Center in Upland and Taylor Hospital in Ridley Park, which remained open after Prospect closed two other Delaware County hospitals in recent years. Three ambulatory surgery and imaging centers will remain open pending a sale.
And a section from Senator Murphy’s study:
As hospital staff paid for supplies with their own money and patients haggled for necessary equipment over the phone, Leonard Green began to cash out on their investment. They sold the land the hospitals sit on for $1.4 billion to a real estate investment trust, Medical Properties Trust, who leased it back to the hospitals at a high rate. In 2018, Leonard Green forced Prospect to borrow $457 million to pay themselves a dividend while Prospect recorded a $244 million net loss [11]. Finally, in 2021, Leonard Green sold their majority stake in Prospect, leaving nothing but debt and destruction in their wake.
So the big extraction mechanism was the oft-used private equity method, applied also to retailers and restaurant chains, of selling real estate and saddling the operating company with high-cost rental agreements so as to provide the new real estate buyers with an income stream that enables the private equity looter to get a high price for the property sale.
Yet despite the justified outrage, efforts to curb private equity ability to buy hospitals have largely failed. Prospect filed for Chapter 11 in January 2025. From the CT Mirror in June:
After Prospect Medical Holdings, the formerly private equity-backed owner of three Connecticut hospitals, declared bankruptcy in January, Gov. Ned Lamont and state officials from both sides of the aisle proposed measures aimed at reining in private equity in the state’s health care system.
But when the 2025 legislative session drew to a close in the first week of June, Connecticut had failed, for the second year in a row, to pass any legislation related to private equity ownership of health care facilities.
Two competing bills, one from the governor and one from the Senate, each laid out an approach for protecting the state’s health care system from potential bad actors.
The governor’s proposal sought to increase oversight of major health care industry transactions — such as hospital mergers and acquisitions — by broadening the types of deals that would require state review to include those typically used by private equity-backed operators. The Senate bill focused on banning private equity involvement outright in certain parts of the health care system.
What is disappointing is that this approach omits powers that states have and have not used.
In a meeting with then head of New York’s Department of Financial Services and Insurance (which also oversees medical insurance), Benjamin Lawsky told me he told prospective private equity buyers of hospitals that they would be regulated every bit as strictly as current owners, with the hardly-hidden implication that the DFS would come down on them if they tried degrading care or played games like surprise billing. These conversations had a chilling effect on private equity purchases of New York hospitals, at least in his day.
By Brad Reed, a staff writer at Common Dreams. Originally published at Common Dreams
A US senator on Wednesday released a report that detailed how private equity firms have ruined hospitals in his home state and across the country.
The report from Sen. Chris Murphy (D-Conn.) documented what happened when three Connecticut hospitals—Waterbury Hospital, Rockville General, and Manchester Memorial—were bought by Prospect Medical Holdings, a private equity-backed healthcare firm.
Interviews conducted with staff members of these hospitals told a consistent story about how Prospect cut corners in nearly every conceivable aspect and worsened the care patients received at the hospitals.
Ramona, an operating room assistant at Waterbury Hospital cited in the report, explained how Prospect went to extreme lengths to avoid spending money. She explained to Murphy that Prospect at one point stopped paying vendors, which resulted in supplies eventually growing “so scarce patients were sometimes left on the operating table while staff scrambled” to find the necessary equipment.
Staff members eventually started buying supplies themselves, with some even going so far as to buy food for their patients to ensure that they did not go hungry.
A nurse named Anne-Marie, who has worked at Manchester Memorial for over three decades, told Murphy’s staff that it was only through the dedication of staff members that her hospital was able to continue functioning at all.
“You know, I’m very fortunate where I work that we still care and patients can’t believe what a good job we do despite all of the obstacles and hurdles we’ve been given,” she said. “We still show up every day and we’re committed to our communities, thankfully.”
Prospect didn’t just skimp on buying supplies for the hospitals but also on maintaining the buildings themselves. A unit secretary at Waterbury Hospital named Carmen told Murphy’s staff of two instances where the ceiling at the building literally fell down due to years of neglect.
“We were lucky enough that the patient had already been discharged and where it fell, it would have missed the stretcher and the patient,” she said of the first instance. “The other time it fell in the trauma room, it was only on top of the computers… so we called maintenance, and they came and fixed it, [which means] putting a little hose where the water is and putting buckets to catch the water…it’s happened a lot.”
The deterioration of patient care at Waterbury became obvious by 2019, when the report noted that it “recorded the highest rates of patient readmission in the state.”
Things got even worse for the hospitals when Leonard Green & Partners, the private equity firm that at the time owned Prospect, decided to sell the land where the hospitals reside to a real estate investment firm that then leased the land back at high rates. The final blow came when Leonard Green sold off its stake in Prospect, which the report says left “nothing but debt and destruction” in its wake.
“After Leonard Green’s exit, Rockville Hospital was losing so much money, they cut all but emergency and outpatient mental health services without the required state authorization, leaving many patients with no full-service hospital nearby,” the report stated.
Prospect itself filed for bankruptcy earlier this year, and the fate of all three hospitals is now “in the hands of a bankruptcy judge in Texas,” the report added.
Murphy’s report also emphasized that the story of private equity stripping hospitals for parts is not unique to his state.
“The story of these three Connecticut hospitals is playing out in healthcare systems all over the country,” it said. “Private equity comes in, squeezes the life out of hospitals and doctor’s offices, and then leaves patients and communities in the lurch.”
