1/ Here's a successful blackmail effort by a private equity firm that owns a large hospital network lehighvalleylive.com/coronavirus/20…
2/ Easton Hospital asked the state of PA for $40 million to stay open in the middle of a public health crisis. Obviously the state needed all hospital capacity running at this time.
3/ Easton Hospital is part of Steward Health Care, a for-profit company wholly owned by private equity firm Cerberus Capital Management. @theprospect profiled Steward here: prospect.org/health/how-pri…
4/ Steward has been rolling up hospitals into its network since 2010, and never truly made money in its first 5 years of operation.
5/ In 2016 Cerberus sold the properties for the hospitals to a company named MPT, and Steward facilities now pays rent on what it used to own. The deal made back Cerberus’s entire investment, but loaded the hospitals with more debt to service.
6/ Cerberus immediately took the investment & started buying up hospitals again, including Easton Hospital in PA. It merged Steward with another PE rollup called IASIS. Steward is now the largest private hospital system in the U.S. by revenue and # of hospitals.
7/ Steward sold most of the IASIS properties to MPT too, forcing those facilities to pay rent. Steward's PE owners have make back their investment; only the employees and communities are at risk. And now Easton is rewarded with what is mainly a bailout of the bad business model
8/ Eileen Appelbaum & Rosemary Batt know this backwards and forwards, here's their recent article on private equity and health care: ineteconomics.org/perspectives/b…
9/ This is yet another robbery. A highly leveraged hospital chain capitalizes on crisis to take bailout funds that are largely unrelated to COVID-19. Disgusting.
10/ Even this bailout only guarantees Easton's survival until June, when they'll ask for more cash.
11/ I should add that Cerberus has at least $42 billion in assets right now, and any of its portfolio companies crying for a bailout at this time is highly dubious. Plus in the case of Easton, it created the crisis it's getting bailed out of.
