A study by physicians in the Journal of the American Medical Association describes a pattern of selling land, equipment and other resources after private equity acquires hospitals.
After private-equity firms acquire hospitals, the facilities’ assets and resources diminish significantly, leaving the facilities less equipped to care for patients, according to a new study by physician researchers at the University of California at San Francisco, Harvard Medical School and the City University of New York’s Hunter College.
Published Tuesday in the Journal of the American Medical Association, the research highlights a pattern of asset stripping at health care facilities purchased by private-equity firms, its researchers said, and is the first study to analyze the activity nationwide.
“It’s a very striking finding and should change the way people think about private equity in hospitals,” said Dr. Stephanie Woolhandler, a distinguished professor of public health at Hunter, part of CUNY, and one of seven authors of the study. “The PE firms say, ‘We bring new capital into hospitals.’ It turns out that’s not quite true.”
Anyone who works in healthcare can tell you this. In fact, private equity almost always makes things worse. In principal, the idea of buying up struggling businesses and getting them on their feet to sell them back for a profit is a pretty cool, normal idea. One could imagine how it’s a sort of second chance for mismanaged businesses or businesses that ran into a streak of bad luck. In practice, it’s just a subscription to vulture capital.