I’ve written a bit about the private equity model and its impact on medicine before. Basically these larger parent companies can load up their held companies with debt, sell them off for profit, and the result is that the rich get richer, the companies get weaker, and the stakeholders — consumers, workers, and communities, suffer. There’s also that whole Take Med Back Movement with Dr. Mitch Li where they’re saying there’s a doctor shortage as an excuse not to staff doctors in emergency rooms because “expensive.”
Eileen O’Grady, then with the Private Equity Stakeholder Project, and who I’d really love to talk to someday, put it out in the open that Prospect Medical Holdings’ parent company, Leonard Green & Partners, basically loaded the company up with debt, sold it off, and left it in a position of needing to cut corners to survive. It was called “raiding the safety net.” Looting the hospitals meant to help the poor.
This is a legitimate way of making money. Where many court reporters lead lives of professional excellence and high standards, there are forces looking to make money off of effectively crippling companies with debt. Your lifelong career is a number on a sheet to some people. That’s a reality I don’t run away from. We need to own it if we are to control our own destinies and destinations.
Healthcare, court transcripts, doesn’t matter. The end is the same: Using a held company to make money, no matter the cost. No matter who it hurts. No matter whose job is on the line. No matter that the science and public opinion says and implies that impacts would be worse for minorities and the poor.
This is, in part, why I publish. If we can get to a point where legislators are able to openly acknowledge that certain things businesses are doing is harmful to the long-term health and stability of society — for example, weakening the financial condition of hospitals for profit — we might be able to get legislatures to act and put guardrails on this business activity, or fund executive agencies that investigate rampant fraud and misinformation more aggressively. We might be able to go from lawsuits after the fact to preventative measures.
At the end of the day corporations are wealth extraction machines. They have a legal duty to make money for their shareholders. Sometimes violating the law is the cost of doing business. Has Leonard Green & Partners itself or its subsidiaries violated the law? Seems likely.
This behavior is profitable and will continue for as long as society allows.
Addendum:
I was later told that CVC acquired Veritext sometime in 2010. This seems plausible because Leonard and CVC seem familiar with each other. It’s also possible they did what they’ve done in the past and maintained some stake while selling the majority.