PHILADELPHIA (KYW Newsradio) — The recent hospital closures in Philadelphia and Delaware County have become case studies in a new report on what can go wrong when private equity goes unchecked in the medical field.
The report is called “Private Equity and Health Care: Balancing Profit with Wellness.”
“[It’s] taking a look at how private equity ownership has had impacts both for the health of people and the health of the businesses,” said author Michael Goldhaber, with the NYU Stern Center for Business and Human Rights.
Goldhaber said researchers looked at hospitals, nursing homes, behavioral care homes and prison health care providers. They saw Southeastern Pennsylvania as one of its clearest case studies of what can go wrong when private equity gets involved in healthcare.
“In between the Crozer system hospitals and Hahnemann [University Hospital], that’s five hospitals that the Philadelphia area has lost as a consequence of private equity ownership in the health care sector,” he said.
According to Goldhaber, they found one glaring theme tying the bankruptcies together. “We found a very pervasive pattern of private equity overloading these health care businesses, that are really vital community institutions, with debt and with new rent obligations,” he said, explaining that these hospitals end up leasing their facilities from their owners.
To avoid the overreach of private equity in the healthcare field, Goldhaber found state lawmakers would have to instill roadblocks to keep profit-first entities from bleeding these community institutions dry.
He said bills such as H.B. 1460, currently in the Pennsylvania House, can help safeguard this from happening.
“They give either state health regulators or the attorney general power to block and veto a takeover if they don’t meet certain criteria,” Goldhaber said. That criteria includes significantly reducing quality of care or access to care, or promoting price inflation, among other factors.