The states where private equity has the most sway over housing, health care, jobs and pensions

For many years, Conemaugh Health System, a hospital chain in west central Pennsylvania, was a nonprofit entity, serving patients in the small communities of Johnstown, Hastings, Meyersdale and Roaring Spring. Today, it is a for-profit system owned in part by Apollo Global Management, one of the largest private-equity firms in the United States.

Since that ownership change in 2018, involving a hospital chain known as LifePoint Health, care at the health system has declined, three patients say. One is Paul Ricci, 53, who works at group homes for the intellectually disabled and in his spare time edits the Johnstown-based Allegheny Independent Media, “a non-fluff website for news and analysis of the Allegheny Region of Pennsylvania,” as he calls it. Recently, he said, he and his father have experienced overnight waits in the emergency department and have had trouble getting through to someone who can answer billing questions.

That a big, New York City-based private-equity firm had stepped in at Conemaugh wasn’t well-known when it happened, he told NBC News. “The same people were there at the hospital,” he said. “I didn’t know the care would be different.”

Like many U.S. consumers, Ricci is beginning to learn about the impact that private-equity firms like Apollo can have on health care. Over the past decade, these firms have spent $1 trillion taking over health care companies across the nation, typically loading them with debt and hoping to sell them at a gain in three to five years. Critics say the drive to profit from the acquisitions of nursing homes, hospitals, physician practices and health care staffing companies conflicts with diligent patient care, and the firms and their purchases are coming under heightened scrutiny from legislators, anti-trust enforcers and patients.

LifePoint Health, for example, is one of the subjects of two Senate inquiries focused on whether financial deals like the company’s may be harming patients. Apollo and LifePoint have said they welcome the scrutiny. Conemaugh did not respond to an email seeking comment.

In recent years, private-equity firms have taken over broad swaths of the nation’s economy, extending well beyond health care. These purchases have involved supermarkets, child care, senior living centers, fast food operations, rental housing and pet care providers. Consumers are often unaware that private-equity firms own the companies they patronize because the firms don’t put their names on the nursing homes, hospitals, veterinary practices and apartment buildings they own. 

But these firms’ involvement in different industries can be extensive — for example, NBC News recently estimated that 40% of the nation’s emergency departments were operated by staffing companies owned by private-equity firms. And by 2030, according to a recent MetLife estimate, companies backed by private equity may own 40% of the nation’s single-family homes, purchases that in many regions have already driven up housing costs for local renters, academics say.

New research by Private Equity Stakeholder Project, a nonprofit group that advocates for more transparency and regulation of the industry, aims to help consumers, legislators and regulators identify where private-equity firms dominate in four key economic areas: health care, housing, jobs and pensions. The analysis, called the Private Equity State Risk Index, details private equity’s involvement in those arenas in all 50 states.

Arizona and Georgia, for example, rank high on the list for housing risks related to heavy private-equity purchases of rental homes; New Mexico and West Virginia place high for health care operations dominated by the financiers. Alabama and Massachusetts have an elevated impact on workers and jobs while Washington state, Louisiana and Michigan rank high in pension risk because of investments in private equity, the research states.

The index shows “the private equity threats in our own backyard and gives state leaders the tools to protect the people they serve,” said Chris Noble, policy director at Private Equity Stakeholder Project. “By providing transparent data on the risks associated with private equity investments, we empower communities, working families, and policymakers to advocate for change and protect their states from the threats posed by unchecked private equity firms.”

More falls and infections

The American Investment Council, the lobbying organization for the private-equity industry, says its members’ acquisitions improve the sectors they invest in. This includes health care, it says. “Private equity investments consistently support quality, affordable health care for patients across America,” the council wrote in a recent letter to federal regulators.

Independent academic research, however, has determined that private-equity ownership of nursing homes, hospitals and physician practices can harm patients. One study showed that residents of nursing homes owned by private equity experienced 10% greater death rates and another showed that patients at hospitals owned by the firms experienced more adverse events, including greater numbers of falls and far more infections.

Only 3.2% of hospitals in Pennsylvania are controlled by private-equity firms, the new state risk index shows, far below the almost 25% of hospitals in New Mexico controlled by private equity. But the readmission rate after discharge among those Pennsylvania hospitals is 5% higher than the national average, the risk index says.

Even though private equity’s involvement in Pennsylvania health care is relatively low, the state has experienced high-profile problems associated with some hospital takeovers by the industry in recent years. Consider Crozer Health, an embattled four-hospital system near Philadelphia that is part of Prospect Medical Holdings. Prospect owns 16 safety net hospitals — those serving low-income patients usually covered by Medicaid — in four states and was backed by private-equity firm Leonard Green & Partners from 2010 until 2021. Struggling under a heavy debt load, Crozer has failed to pay its vendors and shuttered services, several employees told NBC News; Prospect and Crozer have been sued by The Foundation for Delaware County, a community foundation created in 2016 when Prospect bought the health system.

Frances Sheehan is the president and CEO of the foundation, which monitors Prospect’s management of Crozer to ensure it lives up to the terms of the agreement. “We are the only entity that can hold Prospect accountable,” Sheehan said in an interview. “Prospect has swooped in and purchased health systems in Rhode Island, Connecticut, Pennsylvania and California, and their goal is to drain as much from the system as possible under the guise of turning the health systems around.”

Even as Crozer declined, Leonard Green and minority investors in Prospect extracted $650 million in dividends and fees before selling it in 2021, according to research by Private Equity Stakeholder Project. Prospect Medical is also among the companies under investigation by Sen. Sheldon Whitehouse, D-R.I., as NBC News has reported.

“Everybody just wants Prospect to leave and give us a chance to rebuild,” said Peggy Malone, a behavioral health nurse at Crozer-Chester Medical Center and president of Crozer Chester Nurses Association. She has testified before the Senate on the impact Prospect has had on her hospital, where she’s worked for 36 years.

“The stucco is crumbling, the air conditioning doesn’t always work, the quality of supplies is horrendous and the equipment is broken,” she said. “It was a really vibrant hospital — to watch it dwindle away truly breaks my heart.”

A Crozer spokeswoman did not respond to a request for comment. Prospect agreed in February to try to sell Crozer to a nonprofit in the coming months, pausing the litigation with The Foundation for Delaware County.

Neither Prospect nor Leonard Green responded to requests for comment.

‘In a chokehold’

In the five core counties of metropolitan Atlanta, private-equity-backed companies and other large corporate landlords have taken over more single-family homes than in any other region in recent years, said Taylor Shelton, an assistant professor of geosciences at Georgia State University. He has done extensive research on large corporate landlords, finding that in Fulton County alone, the inventory of single-family homes owned by these landlords more than doubled to 6,429 in 2023, up from 3,169 in 2018.

“It’s an issue of crowding out potential homebuyers, and the effects on tenants go from raising rents, filing for eviction as soon as they can to usually neglecting maintenance in a variety of ways,” he said in an interview. “Georgia has arguably the worst landlord-tenant laws of any state in the U.S. We have essentially no formal protections written in the law. The municipalities have been defanged from having any control over this, which is why these companies invest here.” 

Tenants have endured significant rent increases in Atlanta, according to Alison Johnson of the Housing Justice League, an Atlanta nonprofit group that organizes tenants and provides eviction defense services. “They have us in a chokehold,” she said. “They have purchased so many homes here, they get to manage the market. They get to tell us what rents are set in areas where they have absorbed all the housing.”

The PESP state risk index shows some 17% of homes across Georgia have been purchased by medium, large and mega-investors, up 62% since 2018. Arizona and Nevada are also magnets for private equity and corporate landlords. Some 13.8% of homes in Arizona have been bought by these investors, the index indicates, up 79% from 2018. Nevada has seen these investors’ holdings increase 83% since 2018; their percentage stake now stands at 13.1%.

As for private equity’s impact on jobs, Massachusetts ranks high, with 9% of the private sector workforce employed by these financiers, the PESP state index reports. That’s up almost 20% since 2018. Massachusetts is also among 10 states with the highest number of employee deaths or hospitalizations at employers controlled by private-equity firms — 91 between 2018 and 2022 — as a share of its total private sector workforce.

“The Private Equity Stakeholder Project’s new state risk index is a razor-sharp tool in the fight to hold private equity accountable,” Sen. Elizabeth Warren, D-Mass., said in a statement. “Together, we’re taking on this trillion-dollar, behemoth industry that’s hurting working people and sucking money out of the rest of the economy.”