Report adds to scrutiny of private equity-owned hospitals

Lifepoint Health and ScionHealth's ownership by Apollo Global Management is the focus of a report by a nonprofit formed to hold private equity buyers accountable for the impact their acquisitions have on services and communities.

The report released last week by the watchdog organization Private Equity Stakeholder Project, which criticized the systems' performance and Apollo, follows a recent academic study published in JAMA that raised concerns about higher rates of adverse patient safety events at private equity facilities. The new report was sponsored by two unions representing healthcare workers—the American Federation of Teachers and the International Association of Machinists and Aerospace Workers.

Related: How private equity could be affecting patient safety in hospitals

The two studies add to worries about private equity’s role in healthcare as the Senate Budget Committee undertakes a bipartisan inquiry into private equity ownership of hospitals and health systems.

The nonprofit concluded the health systems, which together include an estimated 220 hospitals across 36 states, have experienced service cuts, poor quality ratings, safety violations and regulatory investigations. The report relied on published media stories and findings from consultants and government agencies.

“It's a lot of the quality and access concerns that advocates have been worried about related to private equity ownership of hospitals and it is happening on a very large scale with Lifepoint,” said Eileen O’Grady, healthcare director at the Private Equity Stakeholder Project. 

Apollo acquired Lifepoint Health in 2018. ScionHealth was created as part of the 2021 merger of Lifepoint and Kindred Health. 

In an emailed statement, Lifepoint said much of the report’s content is inaccurate or lacks appropriate context, arguing that its ownership structure has helped the system “invest in our communities, services and people and advance access to quality care.” 

Apollo did not respond to requests for comment. Efforts to reach ScionHealth were unsuccessful.  

Typically, private equity's healthcare strategy is to implement quick cost-cutting measures to double or triple their return on investment, O’Grady said. At Lifepoint and ScionHealth facilities, around 70 of which are in rural areas, this has played out as a reduction in less-profitable services, layoffs and a lack of competitive wages, she said.

“Those kinds of cuts mean that patients have less time that they spend with their providers, and that increases the risks of hospital-acquired conditions,” she said. 

Lifepoint and ScionHealth hospitals tend to score lower than other facilities on quality metrics and ratings of patient safety. Last year, a group of 55 Apollo-owned hospitals earned an average star rating of 2.71 from the Centers for Medicare and Medicaid Services, compared with the national average of 3.16 stars. 

Among Apollo-owned facilities, 45% received “C” safety grades from the Leapfrog Group in November, and 12% got “D” grades. Of all hospitals graded by Leapfrog, 39% received “C’s” and 7% received “D’s.”

Unionized workers in particular have voiced concern about their ability to properly care for patients, with many worrying that management decisions are driven by profit, said Randi Weingarten, president of the American Federation of Teachers. 

“These private equity firms don't care about decent pay,” Weingarten said. “They don't care about moral injury. They don't care about what's going on on the hospital floor, and they certainly don't care about patients."

Healthcare workers at St. Joseph Regional Medical Center, in Lewiston, Idaho, claimed in 2022 that ScionHealth began outsourcing certain pharmacy services at the facility, adding to nurses’ workloads, while also cutting employees’ sick pay and retirement benefits. 

In 2020 Lifepoint cut its annual salary and benefit costs by $166 million and its supply costs by $54 million, according to the health system’s 2020 financial statement. 

The stakeholder project's O'Grady said the hope is that hospitals, especially rural and safety net facilities, are better protected from the financial practices of private equity firms. 

“There needs to be much stronger regulation around what companies, firms and Wall Street can do to raid health care systems at the cost of care,” she said.