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The plundering of America’s hospitals

Here is a summary of the article.  

The article exposes how private equity firms and a real estate investment trust called Medical Properties Trust (MPT) have profited massively by stripping hospitals serving low-income communities of their real estate assets. MPT specializes in buying land and buildings from hospitals and then leasing it back to them, forcing the hospitals to pay rent on property they previously owned. Many of these hospitals were already struggling financially before selling their real estate to MPT. The added rent burden from the sale-leaseback deals deepened their financial troubles, resulting in at least 13 hospitals having to close or go bankrupt after transactions with MPT.

However, the private equity owners of these hospitals could extract huge windfalls by selling the real estate to MPT, even though their hospital investments were failing. Major firms like Cerberus, Apollo, and Leonard Green paid themselves lucrative dividends and fees from the cash influx despite the hospitals’ declining performance. MPT executives also profited handsomely through bonuses tied to the deal volume, while communities were left grappling with diminished healthcare access. The transactions demonstrate how private equity exploited vulnerable hospitals, enriching investors at the expense of patient care in underserved areas. A bipartisan congressional investigation is now examining the disturbing practices. According to the article, the sale-leaseback deals orchestrated by private equity firms and Medical Properties Trust (MPT) have had severely detrimental effects on patient care, especially in low-income and underserved communities:

  1. Hospital closures: At least 13 hospitals have been forced to close or go bankrupt after selling their real estate to MPT and taking on unsustainable rent burdens. This eliminates access to healthcare services in those communities
  2. Service cuts: Other open hospitals have had to cut services like obstetrics, emergency care, and psychiatric care due to financial distress exacerbated by the real estate deals. This reduces the level and quality of care available.
  3. Staff/supply shortages: The article cites examples of hospitals unable to adequately staff or supply themselves after the transactions, such as a Louisiana hospital ordered to turn away patients due to inadequate staffing and supplies.
  4. Facility dilapidation: With funds siphoned away to MPT rents, some hospitals have let facilities and equipment fall into disrepair, with issues like broken elevators creating unsafe conditions.
  5. COVID response impacted: During the pandemic, some MPT-leased hospitals nearly shut down entirely, which could have devastated the COVID response in their communities.

In essence, the cash extracted by investors left these hospitals struggling to invest in patient care, maintain services, and keep facilities properly operating and supplied - putting community health and lives at risk, especially among already underserved populations. The prioritization of profits over patients is the core critique.

References

McLean, Bethany. “The plundering of America’s hospitals.” Business Insider, 11 Mar. 2024, https://www.businessinsider.com/medical-properties-trust-profit-stripping-hospitals-real-estate-private-equity-2024-3

 

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