Private equity has piled into healthcare in recent years, but one company's recent moves have some questioning whether it belongs in the industry.
Los Angeles-based Prospect Medical Holdings has come under fire for shuttering hospitals and service lines across multiple states after paying itself and shareholders $457 million from a $1.1 billion loan in 2018, CBS News reported Dec. 6. The company paid the loan by selling assets to a healthcare real estate trust.
Prospect Medical then turned around and leased the same assets from the trust, resulting in $35 million in annual rent charges.
The company began cutting services earlier in 2022 at the 168-bed Upper Darby, Pa.-based Delaware County Memorial, the report said. The hospital's emergency department closed in November.
"What they've done is extremely evil, in my words," emergency nurse Angela Neopolitano, who worked at Delaware County Memorial for 41 years, told CBS News. "To gain a dollar, you maybe destroyed lives, maybe even ended lives, because they can't get the help they need."
Paramedics in the hospital's system at one point found that the credit cards used to refuel their ambulances had been disabled because Prospect Medical "didn't pay their bill," Ms. Neopolitano told CBS News.
Delaware County officials said Prospect Medical told them labor costs, inflation and strain from the pandemic all fed into its decision to cut services, the report said.
"I had the sense they were not giving us all the information," county official Monica Taylor told CBS News.
The Pennsylvania Office of the Attorney General has filed a petition seeking to have Prospect Medical held in contempt and fined $100,000 per day for violating a court order prohibiting the hospital's closure pending further order by the court.
Prospect Medical has said it plans to convert Delaware County Memorial into a 100-bed behavioral health facility, the report said.