People are not happy about private-equity’s growing stranglehold on the American healthcare system. And by people, we mean elected officials and regulators. There’s a cross-departmental federal probe into the “impact of corporate greed in health care.” Some dozen states—red, blue and purple—have or hope to bolster scrutiny of M&A in healthcare.
We can’t imagine why.
In the spring of 2020, Cerberus Capital Management was faced with a tricky financial situation. It owned a struggling hospital chain that needed $400 million to dig out of a deep financial hole, but Cerberus wanted to sell rather than invest more./With the surging Covid-19 pandemic making the financing more urgent, Cerberus convinced the hospital’s landlord to put up the cash. The transaction didn’t make financial sense and, until recently, was impossible to untangle.
The deal helped shape much of what followed for Steward Health Care System over the next four years, culminating this week in the Chapter 11 filing of Steward, one of the biggest hospital bankruptcies in U.S. history…. The 2020 deal paved the way for Cerberus to sell its majority stake in Steward to the hospital chain’s chief executive and others and lock in an eventual $800 million profit.
OK, fine, one bad apple, but….
Prices for surgery, intensive care and emergency-room visits rise after hospital mergers…. Such price increases added an average of $204 million to national health spending in the year after mergers of nearby hospitals…. Workers cover much of the bill, said Zack Cooper, an associate professor of economics at Yale University who helped conduct the study. Employers cut into wages and trim jobs to offset rising insurance premiums, he said.
Uh, inflation?
The study, published in JAMA on Tuesday, found that, in the three years after a private equity fund bought a hospital, adverse events including surgical infections and bed sores rose by 25 percent among Medicare patients when compared with similar hospitals that were not bought by such investors. The researchers reported a nearly 38 percent increase in central line infections, a dangerous kind of infection that medical authorities say should never happen, and a 27 percent increase in falls by patients while staying in the hospital.
The Private-Equity Deal That Flattened a Hospital Chain and Its Landlord [WSJ]
US hospital network Steward files for bankruptcy, aims for new loan [Reuters via Yahoo!]
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