A corporate watchdog group is calling for increased federal oversight of joint ventures between private equity firms and nonprofit healthcare organizations.
The Private Equity Stakeholder Project (PESP) released a report documenting more than 500 such partnerships across the United States, involving rural hospitals, hospice care providers, and major religiously affiliated health systems.
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“This is the challenge with private equity – it’s private, so they don’t have to report what they own,” said Jim Baker, founder and executive director of PESP.
“We think this just scratches the surface.”
The report, titled “Private equity’s joint venture takeover of nonprofit healthcare,” examines the legal mechanisms enabling these arrangements and includes four case studies.
Data from New York University researchers shows that private equity funds have invested over $1 trillion into debt-financed healthcare transactions in the last decade.
PESP findings also note that 488 hospitals—8.5% of all private US hospitals—are fully owned by private equity.
“I don’t think it’s an irrelevant question to ask whether there’s some tension between a nonprofit hospital and a for-profit investor group joining forces,” said Erin Fuse Brown, a health policy professor at Brown University School of Public Health.
Nonprofits are “legally obligated to pursue their charitable purpose,” she added.
The private equity industry employs more than 13 million American workers and contributes an estimated $2 trillion to US GDP across multiple sectors, according to the Securities and Exchange Commission.
These funds typically consist of accredited investors, including institutional investors, university endowments, insurance firms, and pension funds.
