Four notable House Democrats asked the private-equity firm Leonard Green & Partners to return dividends the firm paid to investors from Prospect Medical Holdings.
The letter's signatories include House Appropriations health subcommittee Chair Rosa DeLauro (D-Conn.), Ways & Means health subcommittee Chair Lloyd Doggett (D-Texas), freshman Committee on Oversight and Reform member Katie Porter (D-Calif.), and Judiciary Committee Vice Chair Mary Gay Scanlon (D-Pa.). All four lawmakers represent communities with hospitals owned by Prospect Medical Holdings and are members of the Congressional Progressive Caucus.
Porter is a rising star in the Democratic party, and has quickly become known for her fierce, telegenic grillings of corporate executives and government officials.
The Leonard Green-led investor group that owns Prospect Medical Holdings, a chain of safety-net hospitals and physician groups, has drawn $658 million in fees and dividends from the investment. The hospital chain's operating margin dropped from 10.8% in 2015 to 0.6% in 2018 under Leonard Green ownership, the lawmakers wrote.
"In using Prospect Medical to pay itself and its investors massive dividends, Leonard Green is putting some of our communities' most vulnerable patients at risk and weakening public health protections," the lawmakers wrote.
Leonard Green did not respond to an inquiry about whether it intends to return any dividends and fees. The lawmakers requested a response by June 12.
Safety-net providers have struggled during the COVID-19 pandemic, as they already operated on thin margins. HHS announced a $10 billion grant distribution to safety-net hospitals on Tuesday after reports that they were proportionately disadvantaged by prior federal financial relief.
Leonard Green is in the process of selling its majority share in Prospect Medical Holdings to the chain's management. Prospect Medical Group, a subsidiary of Prospect Medical Holdings, announced in May that it plans to acquire three independent medical practices. The deal would double the group's network to 20,000 doctors.