Prospect Medical Holdings files for bankruptcy after owners took hundreds of millions in payouts [View all]
Because of course they did.
This is your healthcare on robber baron capitalism.
https://www.cbsnews.com/news/prospect-medical-holdings-bankruptcy-private-equity/
(emphasis added)
Along with Steward, Prospect Medical has been one focus of an ongoing CBS News investigation revealing how private equity investors have siphoned hundreds of millions of dollars from community hospitals with devastating public health consequences.
From 2010 to 2021, private equity firm Leonard Green & Partners controlled a majority stake in Prospect Medical. CBS News has reported on a series of financial moves the company took to issue leadership a $457 million dividend in 2018. Prospect Medical's CEO Sam Lee took home about $90 million while Leonard Green shareholders were paid $257 million.
Among the similarities between Prospect Medical and Steward, both of them relied on the value of their hospital real estate to help finance large payouts for their owners. The transactions resulted in onerous lease agreements that diverted funds away from direct patient care.
Last week, a powerful, bipartisan Senate committee found what it said was "overwhelming evidence of financial mismanagement" as Leonard Green and Prospect Medical sought to drive profits, causing hospitals serving vulnerable communities to cut services or close altogether. The Senate committee's findings were part of a 162-page report report that concluded private equity's financial model may pose "a threat to the nation's health care infrastructure, particularly in underserved and rural areas."