Congress has yet to take action to protect patients from surprise medical bills – leaving millions of Americans at the whim of private equity firms and out-of-network providers. Instead, the federal government has approved massive taxpayer-funded bailouts for private-equity backed companies at a time when they are cutting pay and benefits for doctors on the frontlines of the COVID pandemic. New reporting from Bloomberg – Private Equity Lands Billion-Dollar Backdoor Hospital Bailout – captures the latest:
“As the coronavirus pandemic upended the U.S. health-care system, EmCare IAH Emergency Physicians, a Houston staffing company owned by private equity firm KKR, made a little-noticed request of the government: It applied for a $317,379 interest-free loan. KKR had for years paid lobbyists to fend off efforts to ban a practice known as surprise billing used by EmCare and other providers that has driven up the cost of health care. But that didn’t stop the U.S. Health and Human Services Department from approving the loan and almost 300 others totaling more than $60 million to subsidiaries of KKR-owned companies.
Shut out from many coronavirus relief programs, private equity companies have found a back door at HHS, where they have borrowed at least $1.5 billion, according to a Bloomberg News analysis of more than 40,000 loans disclosed by the department. That money, from two programs intended to provide emergency funding to financially strapped health-care companies, went instead to hospitals, clinics and treatment centers controlled by the richest investment firms as they seek to take advantage of an economic downturn caused by the pandemic to buy ailing businesses.
KKR has more than $58 billion of cash to invest. Health-care facilities owned by Apollo Global Management, which started the year with about $46 billion, received at least $500 million in HHS loans. And Cerberus Capital Management’s Steward Health Care System LLC, which threatened to close a hard-hit Pennsylvania hospital, received at least $400 million in loans. Last month Cerberus was working to quadruple the size of a fund to invest in distressed loans to $750 million.
The paradox of private equity funds, which profit from tax breaks the U.S. offers on debt, is that even when they’re brimming with cash, there is little incentive to use it to prop up their struggling investments. In bad times, the funds can set themselves up for future windfalls by buying new distressed companies and using debt to multiply their profits, even if their current holdings suffer. The pandemic is ‘a time to shine,’ two Apollo executives said on a call with investors in late March.”
To view the full story, click here.