Let's meet some job creators! Private equity plute Leonard Green bought Prospect Medical a decade ago. He and his CEO Sam Lee, spent the years since buying up hospitals that serve low-income people. It paid off. Green has extracted $400m in dividends!
Green and Lee have a really cool way to make money on hospitals: they don't pay their suppliers, they steal their workers' pensions, and they get government subsidies to keep low-income hospitals open and then close them. Also, they defraud Medicare.
Oh, and they borrow FUCKLOADS of money by issuing junk bonds, weaseling around with bond-rating agencies that would otherwise issue a strong stay-the-fuck-away rating on their debt offerings.
At this point, you may be asking yourself, "What if I was in danger of dying and one of Green and Lee's hospital was the closest hospital?"
I have good news and bad news for you. The good news is that Green made $400m from this proposition.
The bad news? His hospitals don't have...anything. Like, gauze. Sponges. IV fluid. They don't have GAS FOR THE AMBULANCES.
Why? Because Green and Lee stiffed their suppliers and got on credit hold with 'em.
This was all BEFORE the pandemic. It only got worse after the plague struck: Green and Lee's hospitals saw nurses wearing plastic shopping bags on their feet because there were no booties. Nurses who brought in their own N95s were threatened with termination
All of this is recounted in eye-watering, blood-boiling detail in Propublica 's "Investors Extracted $400 Million From a Hospital Chain That Sometimes Couldn’t Pay for Medical Supplies or Gas for Ambulances," by Peter Elkind with Doris Burke.
Much of their reporting relies on the legion of Prospect executives that were hired by Leonard and Lee, who then cheated them out of their compensation, bonuses and severance, abusing/firing them, then forcing them into arbitration instead of a court.
Now, here's the thing. Leonard and Lee are PIONEERS. Back in the late 90s, healthcare was poison for private equity - too regulated! These job-creators gambled that they could apply the traditional PE business-model to hospitals.
As a reminder, here's that business model: Buy a bunch of companies, mostly financed with debt. Screw suppliers. Slash staff. Screw suppliers. Lower product quality. Raise prices. Borrow LIKE CRAZY on the assets. Pay yourself HUGE dividends and consulting fees.
Then, unload the debt-saddled, crippled, disgraced, demoralized husks onto someone else (often another PE vulture who repeats the process!), fill your bathtub with krugerrands, and literally wallow in your money.
Lee and Leonard bet that they could make this work in health-care, but they were only partly right. As it turns out, no one wants to buy their death-trap morgues-masquerading-as-hospitals. Leonard keeps trying to unload 'em, but no one is buying.
(Don't worry: the unlimited fed backstop of junk bonds let him issue even more debt and declare yet another dividend to himself, even as the doctors and nurses in his hospitals were putting shopping bags on their feet)
Other PE job-creators have learned an important lesson from Lee and Leonard's partial victory: rather than buying and looting whole hospitals, they're sticking to Emergency Rooms:
It's a great bet. Lee and Leonard correctly assumed that if they murdered poor people through medical negligence that no one would hold them to account; the ER looters' assumption is that if they steal from unconscious people, they won't be able to complain.
And Prospect is instructive in another regard: if you want a preview of the future of emergency care in America, just look at Prospect, with its closures, the empty ambulance gas tanks, the bare medical-supply shelves.
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