Private equity strips hospital assets

Investment Analysis Clubs Macro Economic Trends and Risks
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Private Equity Strips and Devalues Successful Hospitals, Studies Show

— Most acquired hospitals were doing well, but lost millions in assets after the takeover

by Rachael Robertson, Enterprise & Investigative Writer, MedPage Today, July 31, 2024

Private equity firms appeared to target already successful hospitals, and after acquisition, reduce hospital assets for investor profit, according to two research letters…

"In some places private equity firms have sold off hospitals’ land and buildings to profit investors, saddling the hospitals with rent payments for facilities they once owned… acquisition deals are financed with a significant amount of debt, and that debt is placed on the hospital…

Asset stripping is a common practice nationwide, and private equity’s claim that they ‘infuse capital’ is absolutely false."… [end quote]

Buy a company, load it with debt, strip the assets, transfer the profits to the investors. This is the private equity model. Hospitals are only the latest targets.

How many hospitals will have degraded service to the patients? How many will be bankrupted like so many victims of private equity?

Wendy

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Ayup. Another major bankruptcy lately, iirc some restaurant chain, had owned it’s stores. PE sold the real estate, then leased it back, while the money from the RE transactions magically left the company. The company was then crushed by the lease payments and went BK.

As an article said, some years ago, words to the effect that what PE groups do would be fraud in most of the world, but it’s perfectly legal here.

Steve

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