If private equity comes for your hospital, check it out; you may need to ask, 'Is a bad hospital better than no hospital?'

Audrain Community Hospital in Mexico, Mo., closed in March. (Photo from Kaiser Health News)

"Private-equity investors, with their focus on buying cheap and reaping quick returns, are moving voraciously into the U.S. health-care system . . . putting vulnerable communities at the mercy of firms whose North Star is profit, rather than patient health," reports Sarah Jane Tribble of Kaiser Health News.

Tribble's object example is Noble Health, which recently closed two rural hospitals in central Missouri: Audrain Community Hospital in Mexico and Callaway Community Hospital in Fulton. The company gave vague reasons, but it "should have had plentiful resources to keep them afloat," Tribble writes. "Noble was launched in late 2019 by Nueterra Capital, a venture capital and private equity firm that has raised millions of dollars to back dozens of health-care companies, according to Nueterra’s portfolio and federal filings. What’s more, in addition to Medicare and Medicaid funds, Noble had received nearly $20 million in federal Covid relief money in the 18 months before it closed the hospitals — funds whose use is still not fully accounted for."

Kaiser Health News chart by Krishna Sharma

Tribble says the story is a cautionary tale for other communities with struggling hospitals: "Noble acquired the hospitals after charming local leaders desperate to save beloved local institutions. And federal regulators did nothing to block or thoroughly vet the acquisition, despite red flags. Noble’s directors had little health-care experience. The one who did was Donald R. Peterson, whose previous foray into the space, an infusion company, ended with charges of Medicare fraud."

After Noble took over, "The hospitals stopped paying their bills, according to lawsuits filed by contract nurses, security guards, and others," Tribble reports. "Inspection reports from the state workers coordinating with the Centers for Medicare & Medicaid Services were alarming, listing 135 pages of deficiencies that put patients “at risk for their health and safety.”

The business model of Noble and other private-equity firms is “all about creating short-term returns for shareholders,” Ambar La Forgia, a Columbia University assistant professor who studies private equity in health care, told Tribble, who says LaForgia raises a hard question for rural America: “Is a bad hospital better than no hospital?” In Audrain County, officials didn't know that was the question, and they "were easy prey for investors," Tribble writes. "Noble was the only bidder for the failing hospital, said Lou Leonatti, the longtime local attorney, and many in Mexico, a town of 11,000 and the county seat, 'believed we were saved'."