Investors extracted $400M from hospital chain that couldn't afford supplies

Leonard Green & Partners, a private equity firm, has taken $400 million in dividends and fees for itself and investors in the decade since it bought a controlling stake in Los Angeles-based Prospect Medical Holdings, according to ProPublica

According to ProPublica, the private equity firm extracted the dividends by loading Prospect up with debt, not from profits. 

While the owners of Prospect have taken home millions — the CEO made $128 million while the company expanded from five to 17 hospitals — its hospitals have been plagued by safety issues and sometimes couldn't afford supplies, according to the report.  

"Say we need 4x4 sponges, dressing for a patient, IV fluids … we might not have it on the shelf because it's on 'credit hold' because they haven't paid their creditors," Leslie Heygood, a registered nurse at one of Prospect's Pennsylvania hospitals, told ProPublica

The federal government's quality of care assessment ranks all but one of Prospect's hospitals below average, and Prospect hospitals have been deemed by CMS to pose "immediate jeopardy" to their patients 14 times in the past decade, according to the report. 

Leonard Green & Partners and Prospect declined ProPublica's request for interviews. They did send written statements through a PR firm, saying they provide good patient care, have abided by the law and invested hundreds of millions in their hospitals. 

"Prospect Medical Holdings is a healthcare system that provides compassionate, accessible, quality healthcare and physician services," according to the statement provided to ProPublica

Read the full ProPublica article here

More articles on healthcare finance:
HHS to send $20B to healthcare providers: 5 things to know
Mayo Clinic, IRS to face off in federal court
Houses passes $2.2 trillion in COVID-19 relief

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars