Report Details Over 500 Joint Ventures Between Private Equity and Nonprofit Healthcare Providers

A new report from the Private Equity Stakeholder Project identified more than 500 joint ventures between private equity firms and nonprofit healthcare providers, including rural hospitals, religiously affiliated health systems, and hospice care providers.

The report argues these partnerships could present risks to patients, payers, and employees, including profit extraction and declines in quality of care. It also expands on the group's earlier tracking of hospitals wholly owned by private equity, which it says now total 488 facilities, or 8.5% of all private hospitals.

Joint ventures between private equity-owned healthcare companies and nonprofit providers are governed by Internal Revenue Service decisions from 1998 and 2004. The IRS rulings allow nonprofits to maintain tax-exempt status if they retain control over their mission and ensure charitable purposes take priority over profit generation.

The report presents four case studies. One involves LifePoint Health, acquired by Apollo Global Management in 2018. Nine hospitals in joint ventures with LifePoint later sold property to real estate investment trusts. Another case examines Wilson Medical Center in North Carolina, a county-owned facility that entered a joint venture with Duke LifePoint Healthcare in 2014 before Apollo acquired LifePoint.

The chain accumulated $9 billion in debt before filing for bankruptcy, leading to the closure of two hospitals. Private equity funds have invested more than $1 trillion in debt-financed healthcare deals over the past decade, according to researchers at New York University.

The report states that government officials should increase oversight to verify that joint ventures continue to fulfill their charitable obligations.