The Massachusetts attorney general oversaw the conversion of the hospitals from non-profit to for-profit status, and monitored Cerberus' compliance with requirements for charity care and investment for five years. Cerberus Capital, a private equity firm, bought six Catholic hospitals in the Boston area in 2011. Cook Professor of Women and Work, provides an example: "Take the Steward Health Care System. Sale-leasebacks provide quick returns for private equity firms and stable long-term returns for the REITs.īatt, the ILR School's Alice H. The REITs buy the real estate and lease it back to hospitals or nursing homes in long-term leases that typically increase at 3% annually. Private equity firms buy out health care providers, load them with debt and plan to exit them in a four- to five-year window. Their tactic is known as a sale-leaseback. The perpetrators, the researchers say, are private equity firms in partnership with "real estate investment trusts," known as "REITs." Both are Wall Street investment funds that most people have never heard of, but that have increasingly penetrated the health care industry. 1 by the Institute for New Economic Thinking and the Center for Economic and Policy Research. In their new study, Batt and Appelbaum describe how investors are undermining the financial stability of hospitals and nursing homes by selling off their real estate and pocketing the proceeds for themselves, rather than reinvesting the money to improve patient care. These findings are documented in research by ILR Professor Rosemary Batt and Eileen Appelbaum, co-director of the Center for Economic and Policy Research.
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