Dear Neighbor,
In February, the Globe broke the story of Sungida Rashid, a new mother who died because St. Elizabeth's Hospital, owned by Steward Health Care, didn't have embolism coils to stop her bleeding. The coils had been repossessed because Steward didn't pay the vendor - just as they weren't paying other vendors.
This tragedy is how most of us found out about the disaster that is Steward Health Care. Now we're learning more and more and more. Particularly memorable: Brian McGrory's column about CEO Ralph de la Torre's yachts.
Steward had already announced plans to close one of its eight Massachusetts hospitals Now all of its hospitals face sale and/or closure.
The legislature's Health Care Financing Committee (HCF) held an enlightening and frightening hearing on March 25 about the impact of private equity in health care. And Senators Ed Markey and Elizabeth Warren held a hearing by the US Senate's Health Committee on April 3.
They're both worth listening to. This newsletter is a short summary of some things we learned in those hearings.
Private equity's approach
David Seltz, executive director of the Health Policy Commission, showed this summary slide at the HCF hearing.
Several panelists raised concerns about leveraged buy-outs, saddling the hospital with debt; and sale-leasebacks, saddling the hospital with high and escalating rent payments. In the Steward case, all the property of the hospitals was sold to Medical Properties Trust (MPT). MPT, a publicly traded company, holds over $8 billion in health care facilities in the US and Europe.
Dr. Rosemary Batt told the HPC committee that the sale-leaseback enabled Cerberus/Steward to quickly repay its investors, while MPT ensured itself a guaranteed cash-flow, with annual rent increases guaranteed for at least 10 years. Steward pays not only rent but maintenance, repairs, utilities, taxes, insurance, etc. She said MPT and other Real Estate Investment Trusts (REITs) target hospitals that are in distress but are too important to fail. They assume that if a hospital fails, the REIT will be safe because the state will find another operator.
Private equity is growing in health care
Private equity is investing in more than hospitals
Another Seltz slide shows that private equity is also investing in many other medical providers.
As of 2020, 70% of Massachusetts nursing homes were owned by for-profit companies. This raises similar concerns as private equity in hospitals; many nursing homes have sold their property to Real Estate Investment Trusts. Our bill would require nursing facilities to report more about their finances, and would strengthen "suitability" requirements to allow a company to buy or license a nursing home. It has passed the House and we expect action soon in the Senate.
I was surprised to see private equity investing in home health and hospice providers. Our bill to require licensure and transparency in home care agencies is also expected to pass the Senate soon.
Dr. Robert Braun told the HCF committee that for-profit hospices selectively serve cancer patients and fewer dementia patients. Cancer patients live less time in hospice and bring in more income per day.
Private equity is also investing in Medicare Advantage plans.
Private equity leads to worse outcomes for patients
Dr. Zirui Song told the HCF committee that private equity acquisitions of hospitals resulted in 25% more Hospital Acquired Conditions, 27% more falls, 38% more central line infections, and twice as many surgical site infections. During the pandemic, the premature death rate for both COVID and non-COVID patients was higher in private equity hospitals.
In her opening remarks, Sen. Warren charged that "During the pandemic, private equity owned nursing homes had a 40 percent higher Covid mortality rate than other nursing homes."
Not just private equity: consolidation
Medicare rates are the same for different hospitals, but commercial insurers negotiate different rates. When hospitals merge/consolidate, their prices to commercial insurers are far higher. This happened with Steward, and is being currently proposed in several cases, including the acquisition of the Steward hospitals.
It's not just Steward
Just this month, the Department of Public Health found that St. Vincent's Hospital in Worcester "did not have enough equipment to properly monitor patients with heart problems." The report concluded that "the hospital failed to provide care in a safe setting,” St. Vincent's is owned by for-profit Tenet Health Care. Here's a list of Tenet's holdings.
In January, the Disability Law Center released a disturbing, in-depth report on Bear Mountain at Worcester nursing facility. They reported over-use of "low staffing, overmedication, and neglect" as well as "rodent infestations and patients partially dressed; some patients lying in bed without even a television for stimulation." Bear Mountain is part of Bear Mountain Healthcare, a for-profit company owned by Sabra Healthcare REIT.
Steward is now planning to sell its physicians group to Optum, a subsidiary of UnitedHealth, the world's eleventh-largest company and the largest health care company by revenue. UnitedHealth includes insurance companies, primary and secondary providers, prescription benefits management, home health... In 2022, it bought Atrius Health, a non-profit physicians group, including Harvard Vanguard. Eight of the nine members of the Massachusetts congressional delegation wrote that "The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups."
This is a long newsletter. These are scary and complex issues.
I hope to have better and shorter news next time.
Stay in touch,
Pat Jehlen