New Senate Report Details How Private Equity 'Devastates' Hospital Systems

A US senator on Wednesday released a report that detailed how private equity firms have ruined hospitals in his home state and across the country.

The report from Sen. Chris Murphy (D-Conn.) documented what happened when three Connecticut hospitals—Waterbury Hospital, Rockville General, and Manchester Memorial—were bought by Prospect Medical Holdings, a private equity-backed healthcare firm.

Interviews conducted with staff members of these hospitals told a consistent story about how Prospect cut corners in nearly every conceivable aspect and worsened the care patients received at the hospitals.

Ramona, an operating room assistant at Waterbury Hospital cited in the report, explained how Prospect went to extreme lengths to avoid spending money. She explained to Murphy that Prospect at one point stopped paying vendors, which resulted in supplies eventually growing "so scarce patients were sometimes left on the operating table while staff scrambled" to find the necessary equipment.

Staff members eventually started buying supplies themselves, with some even going so far as to buy food for their patients to ensure that they did not go hungry.

A nurse named Anne-Marie, who has worked at Manchester Memorial for over three decades, told Murphy's staff that it was only through the dedication of staff members that her hospital was able to continue functioning at all.

"You know, I'm very fortunate where I work that we still care and patients can't believe what a good job we do despite all of the obstacles and hurdles we've been given," she said. "We still show up every day and we're committed to our communities, thankfully."

Prospect didn't just skimp on buying supplies for the hospitals but also on maintaining the buildings themselves. A unit secretary at Waterbury Hospital named Carmen told Murphy's staff of two instances where the ceiling at the building literally fell down due to years of neglect.

"We were lucky enough that the patient had already been discharged and where it fell, it would have missed the stretcher and the patient," she said of the first instance. "The other time it fell in the trauma room, it was only on top of the computers... so we called maintenance, and they came and fixed it, [which means] putting a little hose where the water is and putting buckets to catch the water…it's happened a lot."

The deterioration of patient care at Waterbury became obvious by 2019, when the report noted that it "recorded the highest rates of patient readmission in the state."

Things got even worse for the hospitals when Leonard Green & Partners, the private equity firm that at the time owned Prospect, decided to sell the land where the hospitals reside to a real estate investment firm that then leased the land back at high rates. The final blow came when Leonard Green sold off its stake in Prospect, which the report says left "nothing but debt and destruction" in its wake.

"After Leonard Green's exit, Rockville Hospital was losing so much money, they cut all but emergency and outpatient mental health services without the required state authorization, leaving many patients with no full-service hospital nearby," the report stated.

Prospect itself filed for bankruptcy earlier this year, and the fate of all three hospitals is now "in the hands of a bankruptcy judge in Texas," the report added.

Murphy's report also emphasized that the story of private equity stripping hospitals for parts is not unique to his state.

"The story of these three Connecticut hospitals is playing out in healthcare systems all over the country," it said. "Private equity comes in, squeezes the life out of hospitals and doctor's offices, and then leaves patients and communities in the lurch."