Senate Budget Committee Digs into Impact of Private Equity Ownership in America’s Hospitals

Private financial transactions may be hurting patients nationwide, including in Iowa

WASHINGTON – Senate Budget Committee Ranking Member Chuck Grassley (R-Iowa) and Chair Sheldon Whitehouse (D-R.I.) today opened a bipartisan investigation into the impacts of private equity ownership on our nation’s hospitals. Grassley and Whitehouse sent letters to the chief executive officers (CEOs) of Apollo Global Management, Lifepoint Health, Medical Properties Trust, Leonard Green & Partners and Prospect Medical Holdings, along with the CEO of Ottumwa Regional Health Center, a for-profit Iowa hospital. The senators are demanding answers regarding questionable financial transactions that may have impacted quality of care for patients in hospitals under private equity ownership, including in Ottumwa.

Since coming under private equity ownership, many hospitals, including Ottumwa Regional Health Center, have experienced significant staffing reductions and substandard health care, and have been stripped of valuable assets, including their real estate, leaving them saddled with debt. To assess the impact of these transactions and address their harmful effects, the senators are asking for documents and detailed answers about related-party transactions and the degree to which the private equity firms are calling the shots at these hospitals.

“When it comes to our nation’s hospitals, a business model that prioritizes profits over patient care and safety is unacceptable,” Ranking Member Grassley said. “The shocking events at Ottumwa Regional Health Center prompted me to ask tough questions about how financial maneuvers by private equity and related companies have negatively impacted the resources, and thereby the patient care, at our rural hospitals. Iowa residents, including those living in rural areas, shouldn’t have to settle for anything less than the highest quality of care. I look forward to working with Senator Whitehouse to get answers and ensure that our nation’s hospitals provide high-quality health care to the communities and patients they serve.”

“As private equity has moved into health care, we have become increasingly concerned about the associated negative outcomes for patients,” Chairman Whitehouse said. “From facility closures to compromised care, it’s now a familiar story: private equity buys out a hospital, saddles it with debt, and then reduces operating costs by cutting services and staff—all while investors pocket millions. Before the dust settles, the private equity firm sells and leaves town, leaving communities to pick up the pieces."

Background

In March 2023, Grassley wrote to four companies with ownership interests in Ottumwa Regional Health Center – a formerly nonprofit hospital sold to a private equity firm in 2010 – with concerns following a nurse practitioner’s disturbing assault on nine sedated female patients. The perpetrator later fatally overdosed on the hospital’s premises.

Grassley sought information on Ottumwa Regional Health Center’s financial stability in an effort to determine to what extent the related-party transactions contributed to these alarming events. These companies failed to provide full and complete responses to Grassley’s questions, prompting additional oversight.

In recognition of their increasing concern about the growth of private equity in health care, Grassley and Whitehouse are expanding upon that investigation to include companies that currently own or operate, or formerly owned or operated, hospitals in California, Pennsylvania, Rhode Island and others.

Grassley and Whitehouse’s letters are linked below.

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