Committee hears experts on private equity’s tactics, risks and proposed oversight
Experts told the House Committee on Health Care that private equity uses debt and real-estate transactions to extract cash from health providers, raising costs and bankruptcy risk; witnesses cited Steward Health Care and called for state reporting and limits on sale-leasebacks and dividend recapitalizations.
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Nancy Kane, a presenter and former financial monitor for the Massachusetts Attorney General's Office, said private equity investors typically buy existing health-care organizations with the clear intention of extracting their investment within a limited time frame. "They have to get their money out," Kane said, adding that firms often finance purchases with heavy debt that is placed on the acquired entity rather than the investor.
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