Tragedy and Turmoil: Private Equity's Grip on Healthcare Revealed

Nabil Haque fondly recalls the beautiful moment when his wife, Sungida Rashid, first held their newborn daughter in her arms at Boston's St. Elizabeth's Medical Center in October. However, what should have been a joyous occasion quickly turned into a devastating tragedy as Rashid faced post-delivery complications at a hospital ill-prepared to address her urgent medical needs. This led to her transfer to another facility, where she tragically passed away, leaving Haque to grapple with the heartbreaking loss while focusing on the milestones of their daughter's life. The incident involving Rashid has sparked public scrutiny surrounding patient risks and compromises in healthcare at hospitals owned by private equity-backed companies. Steward Health Care, owned by private equity giant Cerberus, operates 33 hospitals across eight states, including St. Elizabeth's where Rashid gave birth. A CBS News investigation shed light on how private equity investors have been extracting funds from community hospitals, thereby impacting the quality of patient care provided. Steward Health Care has denied these claims, asserting that they have been actively investing in hospitals' infrastructure, equipment, and technology. However, records reveal a different narrative, with Steward hospitals encountering unpaid bills and supply shortages. In a chilling revelation, it was disclosed that a crucial device required to save Rashid's life was repossessed due to overdue payments. Rashid's untimely demise has prompted a state investigation, with hospital staff citing financial issues as a significant factor affecting patient care. Amid concerns about the closure of hospitals in Massachusetts, anxiety looms regarding healthcare accessibility in low-income communities. The financial woes of Steward have been attributed to pandemic-related challenges and low reimbursements, though critics have accused executives of prioritizing personal enrichment over public welfare. Alarming reports have emerged of Steward's owners pocketing millions in dividends while engaging in real estate transactions like selling off hospital properties. Notably, the CEO of Steward acquired a $40 million yacht, further fueling discontent among healthcare workers. Supply shortages and financial irregularities within Steward's hospitals have amplified concerns about the quality of patient care being compromised. In a separate but equally concerning development, a cyberattack targeting medical payment processing company Change Healthcare on Feb. 21 has disrupted billing processes for healthcare providers. Dermatologist Margaret Parsons and her colleagues have been unable to electronically bill for their services since the incident, as California's Medicare payment processor, Noridian Healthcare Solutions, wasn't accepting paper claims either. The American Hospital Association has described this event as one of the most significant against the U.S. healthcare system, placing financial strain on both providers and patients. UnitedHealth Group, the parent company of Change Healthcare, has assured that electronic payments and medical claims services would be reinstated later this month. However, the prolonged outage could potentially result in healthcare providers like Jackson Health System in Florida missing out on millions in payments, thereby hindering their ability to meet financial obligations. While relief programs have been announced by UnitedHealth and the federal government to assist health providers, criticisms regarding the adequacy of financial aid persist. This cyberattack has underscored vulnerabilities within the healthcare system, emphasizing the urgent need for enhanced cybersecurity measures and improved coordination between private entities and government agencies. Concerns have been raised about the implications of a ransom payment to the hackers behind the attack, hypothesizing that it could incentivize further cyber threats. Cybersecurity experts stress the necessity of bolstering defenses within the healthcare sector, including updating outdated medical devices and fortifying information technology resources. In another significant healthcare industry development, Dr. Marc Harrison, CEO of HATCo, known for his expertise in health systems, has spearheaded the acquisition of Summa Health, a nonprofit health system in northeast Ohio. General Catalyst, a venture firm with a track record of investments in healthcare, aims to introduce innovative tech-enabled solutions to enhance the accessibility and affordability of care through this acquisition. Despite the unconventional nature of a venture firm acquiring a hospital – often nonprofit entities due to the high costs of healthcare provision – the deal is progressing, subject to due diligence and regulatory approvals. Summa Health's transition under HATCo's leadership involves a shift towards a value-based care model, with revenue expected to soar under the new operational framework. Concerns have been voiced about a nonprofit entity shifting towards profit-centric practices to appease investors. However, HATCo maintains that its primary goal is to expand revenue streams through novel healthcare solutions rather than cost-cutting measures. General Catalyst's collaborations with over 20 health systems to introduce groundbreaking tools for expedited healthcare delivery support this endeavor. Acknowledging the anxieties among Akron residents and employees regarding Summa Health's acquisition by HATCo, Mayor Shammas Malik has engaged with Dr. Harrison and Summa executives to chart a healthcare model that prioritizes innovation over austerity measures. Harrison's emphasis on managing conflicts adeptly and compassionately to drive healthcare transformations resonates with supporters like Flare Capital's Greeley, who recognize the complexities but endorse General Catalyst's efforts in healthcare innovation. As these events unfold, they spotlight the urgent need for enhanced accountability, transparency, and patient-centric approaches within the healthcare sector to safeguard the well-being of patients and uphold the integrity of medical services.