It finally happened: Steward is under federal investigation. Senators Sanders (I-VT) and Cassidy (R-LA) recently announced a hearing to dig into Steward Healthcare System’s bankruptcy, and issued a subpoena for Steward’s CEO Ralph de la Torre to testify.
Private equity in the news
This investigation is the latest in a series of disturbing news around Steward, a large hospital system formerly owned by private equity firm Cerberus Capital Management. The Boston Globe recently reported that Steward spent millions to conduct surveillance on people who had criticized the health system. And as if there wasn’t enough happening in the U.S., Steward officials are also accused of participating in a bribery scheme related to hospitals they were operating in Malta.
Steward is not the only private equity-affiliated system receiving scrutiny. A hospital in New Mexico owned by Lifepoint Health is under fire for allegedly refusing to treat certain cancer patients based on their insurance coverage. And Prospect Medical Holdings, a system recently owned by private equity, is having trouble selling three hospitals in Connecticut after it was found that the system owes tens of millions of dollars in unpaid debts.
Private equity hospital rankings
At the latest launch of the Lown Hospitals Index of Social Responsibility, the Lown Institute revealed how hospitals performed on 50+ measures of equity, outcomes, and value.
So how did private equity-backed systems do? Here are the grades for seven health care systems currently or recently owned by private equity firms.
| SYSTEM NAME | PRIVATE EQUITY FIRM AFFILIATION | SOCIAL RESPONSIBILITY GRADE | EQUITY GRADE | OUTCOMES GRADE | VALUE GRADE |
|---|---|---|---|---|---|
| ARDENT HEALTH SERVICES | EQUITY GROUP INVESTMENTS | B | B | B | C |
| LIFEPOINT HEALTH | APOLLO GLOBAL MANAGEMENT | C | B | C | C |
| PIPELINE HEALTH | STANTON ROAD CAPITAL, DAVIDSON KEMPNER, DEERFIELD MANAGEMENT | C | A | C | D |
| PROSPECT MEDICAL HOLDINGS | FORMERLY LEONARD GREEN | A | A | A | B |
| QUORUM HEALTH | GOLDENTREE ASSET MANAGEMENT, DAVIDSON KEMPNER | C | A | D | C |
| SCIONHEALTH | APOLLO GLOBAL MANAGEMENT | B | A | C | C |
| STEWARD HEALTH CARE SYSTEM | FORMERLY CERBERUS | B | A | C | C |
Only one system received an “A” grade on social responsibility or patient outcomes. Given emerging research on patient safety issues at hospitals acquired by private equity, this may not be surprising.
None of these systems get an “A” grade in value of care, which is interesting given that private equity advertises their benefits of “efficiency.” However, those following research on private equity and overuse and cost of care will probably not be shocked by this result.
Interestingly, most of these systems do pretty well on equity, with all getting “A” or “B” grades. This could indicate that hospitals serving lower-income populations (which tend to do better on the Lown Index inclusivity and community benefit metrics) might be particularly vulnerable to private equity acquisition. We’ve seen previously how private equity firms can swoop in to “save” struggling safety net hospitals in rural areas, but eventually leave them in worse financial shape.
Want to see how your local system or hospital performs on the Lown Index? See all of the rankings on our website!