A watchdog organization has documented over 500 joint ventures between private equity firms and nonprofit healthcare providers, raising fresh concerns about profit extraction and deteriorating patient care in arrangements that largely escape public scrutiny.
The Private Equity Stakeholder Project released its findings in a report titled "Private equity's joint venture takeover of nonprofit healthcare," cataloging partnerships ranging from small rural hospitals to major religiously affiliated health systems and hospice operators. The group is now pushing federal regulators to impose stricter oversight on these deals.
"This is the challenge with private equity: it's private, so they don't have to report what they own," said Jim Baker, founder and executive director of the watchdog group. "We think this just scratches the surface."
Private equity has poured more than $1 trillion into debt-financed healthcare deals over the past decade, according to researchers at New York University. The industry now controls 488 hospitals, representing 8.5% of all private hospitals in the United States, the watchdog group found.
The structural tension between profit-driven investors and the nonprofit mission has drawn scrutiny from academics. Erin Fuse Brown, a health policy professor at Brown University School of Public Health, noted that nonprofits carry a legal obligation to pursue charitable purposes. "I don't think it's an irrelevant question to ask whether there's some tension between a nonprofit hospital and a for-profit investor group joining forces," she said.
The legal framework permitting these arrangements stems from Internal Revenue Service decisions issued in 1998 and 2004. Under those rulings, nonprofits can maintain their tax-exempt status in joint ventures with for-profit entities, provided they retain control over their charitable mission and ensure that community health priorities override profit generation.
Recent case studies underscore the risks watchdog groups identify. Wilson Medical Center in North Carolina experienced multiple quality-of-care issues after Duke Lifepoint Healthcare acquired a controlling stake in 2014. When Apollo Global Management later acquired Lifepoint in 2018, the hospital faced investigations by the Centers for Medicare and Medicaid Services into two patient deaths. The North Carolina Department of Justice also expressed concern about emergency care protocols and potential legal violations. Wilson Medical Center stated that the issues were addressed years ago and that it has maintained full CMS compliance since 2024.
The Steward Health case illustrated another concern. The chain, once the largest private for-profit hospital system in the United States, descended into a $9 billion bankruptcy by 2024 after Cerberus Capital Management and Medical Properties Trust extracted hundreds of millions for investors. Reports documented deteriorating facilities, supply shortages, and the closure of two hospitals.
A particular practice under scrutiny is the sale-leaseback arrangement. In this model, hospitals sell property to real estate investment trusts and then lease it back, generating immediate cash for both parties but saddling facilities with added long-term expenses. The watchdog report found that nine hospitals in joint ventures with LifePoint Health, after its 2018 acquisition by Apollo Global Management, sold property to REITs shortly thereafter.
Not all experts share the alarm. Anthony T. Lo Sasso, a professor at the University of Wisconsin-Madison's La Follette School of Public Affairs who has studied private equity investment in healthcare, argued that nonprofit and for-profit providers behave similarly. He contended that private equity capital can fund staff expansion, operational improvements, and patient care investments. Some conservative policy advocates have added that healthcare problems predate private equity involvement by decades.
The private equity industry itself views nonprofit partnerships as a growth avenue. Ardent Health's chief financial officer noted that approximately 40% of hospitals operate at a loss, a situation that potential regulatory changes could worsen for nonprofit institutions.
Author James Rodriguez: "The scale of these partnerships and their opacity suggest that regulators are far behind the curve on accountability for deals reshaping American hospital care."
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