Private Equity Takeover: Are Profits Killing Hospitals?

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We told you, warned you, we told you, private equity destroying hospitals. That’s right. Again, they’ve been masters of disaster for a long period of time. I’ve been talking about these guys for years. They were going after Romney and Bain Capital and all the destruction that they have wrought. Do you know that private equity

has bought over 500 hospitals.

Now, let’s get into the numbers. me add one quick question here. If, I don’t know, if somebody bought a business in your town and the outcomes from that business, we gotta be kind of be a little bit more specific here. We’ll do a hospital. Let’s just say a hospital in your town gets bought out and all of a sudden the death rates in emergency rooms went up by 13%.

while at the same time they’re firing 12 % of the staff, while at the same time the private equity companies are paying themselves billions of dollars. study, recent study confirmed what, again, doctors know this.

Doctors know this. Quick, quick sidebar right here. My eldest son who’s he’s working in finance now in New York City. His original dream is he wanted to be an orthopedic surgeon. Actually college he took the pre-med requirements knocked off all those pre-med requirements. He decided to go a different route. And I was

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I wasn’t exactly thrilled by it. I wasn’t because it was something I remember when he was younger. Visiting. Dear friend of mine, orthopedic surgeon, he heard himself playing lacrosse and my friend also happens to take care of all sorts of athletes, pictures on his wall, you know, and he asked him, know, you know, doctor, you know,

Why did you decide to become a doctor? Remember the conversation and Tell him I really really love To help people love to help athletes like yourself. Anyway, neither here nor there, you know you fast forward another You know, maybe 14 15 years my son and again, I’ve got a lot of clients that are doctors physicians Friends you name it and not one

My son couldn’t find one. He’s like, Dad, I can’t find one. One doctor that’s saying, hey, do it. It’s a great job, great career that they don’t like what they’re doing anymore. The same it’s the same scenario with hospitals as it would be with. Would be with, you know.

car rental places or would be with any other type of business by them. They buy a hospital using debt. The debt gets placed on the hospital’s balance sheet, not the firm’s balance sheet. So the hospital now owes millions, hundreds of millions of dollars that it never borrowed. To service that debt, what does a hospital have to do? It has to cut costs.

What are costs? Oh, I don’t know. Nurses maybe. There was a study done. The study was by Harvard and the University of Chicago. After private equity acquisition, emergency department salary spending dropped 18.2%. ICU salary spending dropped 15.9%. Hospital-wide employees cut 11.6%. Emergency department debts rose 13%.

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seven additional deaths per 10,000 visits. separate study found that undergoing surgery at a PE acquired hospital had 17 % higher odds of dying within 90 days.

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Steward Healthcare owned by Cerberus Capital filed bankruptcy, $9 billion in debt after closing hospitals all across the state of Massachusetts. CEO lives on a $40 million yacht, emergency rooms went dark. Eight hospitals serving two million people disappeared because a private equity fund extracted more cash than the system could survive.

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You know, I didn’t know this number. A trillion dollars has been poured by private equity into healthcare. and that’s not just hospitals. Healthcare. Healthcare.

Man, they get non private equity hospital operators, HCA tenant. Every time a private equity hospital closes or deteriorates patients obviously go to the competitor. Again, their returns have been good. Medical staffing firms charge premium rates because

private equity cut staff. Again, it’s why there’s a staffing shortage and it’s kind of a business model for some of these staffing companies. I mean, I could go on and on and on. The model that’s existed for a period of time where you get these private equity companies, and again, this is just gray area that they’re able to swim in. You’re borrowing the money, but you’re putting the money that you borrow on

to the bank, onto the hospital’s balance sheet.

Yeah, how do you improve the product in any way, shape, matter, or form? You don’t. But that’s not what it’s about. It’s just, again, I’ve talked about this. It’s not even being a vampire for crying out loud. Vampires wouldn’t want everyone to die and need to continue to eat. It’s a cancerous form of capitalism, not even capitalism. Watchdogonwallstreet.com.