Becker's Hospital Review

8 CFO / FINANCE Investors extracted $400M from hospital chain that couldn't afford supplies By Ayla Ellison L eonard Green & Partners, a private equity firm, has taken $400 million in dividends and fees for itself and in- vestors in the decade since it bought a con- trolling stake in Los Angeles-based Prospect Medical Holdings, according to ProPublica. According to ProPublica, the private equi- ty firm extracted the dividends by loading Prospect up with debt, not from profits. While the owners of Prospect have tak- en home millions — the CEO made $128 million while the company expanded from five to 17 hospitals — its hospitals have been plagued by safety issues and some- times couldn't afford supplies, according to the report. "Say we need 4x4 sponges, dressing for a patient, IV fluids … we might not have it on the shelf because it's on 'credit hold' because they haven't paid their credi- tors," Leslie Heygood, a registered nurse at one of Prospect's Pennsylvania hospitals, told ProPublica. e federal government's quality of care as- sessment ranks all but one of Prospect's hos- pitals below average, and Prospect hospitals have been deemed by CMS to pose "imme- diate jeopardy" to their patients 14 times in the past decade, according to the report. Leonard Green & Partners and Prospect de- clined ProPublica's request for interviews. ey did send written statements through a PR firm, saying they provide good patient care, have abided by the law and invested hundreds of millions in their hospitals. "Prospect Medical Holdings is a healthcare system that provides compassionate, acces- sible, quality healthcare and physician ser- vices," according to the statement provided to ProPublica. n HCA to return $6B in federal COVID-19 aid By Ayla Ellison N ashville, Tenn.-based HCA Healthcare released a preview of its third-quarter financial results on Oct. 8 and said it is returning $6 billion in federal grants and loans meant to offset financial strain tied to the COVID-19 pandemic. Earlier this year, the 186-hospital system received about $6 billion made avail- able under the Coronavirus Aid, Relief and Economic Security Act. It received $1.6 billion in provider relief grants and $4.4 billion in Medicare accelerated payments. The grants do not have to be repaid, and the accelerated payments are loans that the company would have to start repaying one year from when they were issued. HCA, which ended the second quarter with a $1.1 billion profit, didn't need the emergency relief aid and said it will return the funds. "As the initial immediacy of the emergency has passed, and with more infor- mation, and more experience managing our operations during the pandemic, we believe returning these taxpayer dollars is appropriate and the socially re- sponsible thing to do," HCA Healthcare CEO Sam Hazen said in a news release. "Our focus will remain on supporting our patients, employees and physicians and continuing the vital role we play in the communities we serve." The company said it expects to report revenues of $13.3 billion for the third quarter of this year, up from $12.7 billion a year earlier. Income before taxes is expected to be about $950 million, compared to $979 million in the same quarter of 2019. n Texas hospital seeks critical access status as break with Baylor Scott & White looms By Morgan Haefner L lano (Texas) County Memorial Hospital applied in September for a critical access designation that would allow the rural hospital to reduce its finan- cial vulnerability through increased Medicare reimbursement, according to DailyTrib.com. The application comes as Llano County Memorial prepares to part ways with Dallas-based Baylor Scott & White. An operating agreement between the two organizations expires at the end of 2020, with no renewal planned. Baylor Scott & White has managed Llano County Memorial for the past 10 years, according to the news site. Part of the reason the contract isn't being renewed is due to the rural hospital's finances, according to the news site. El Campo, Texas-based MidCoast Health System is vying to take over management of Llano County Memorial. Llano County Memorial was working with a tight deadline for its critical access application as the operating contract deadline approached. Under the desig- nation process, a third-party contractor helping the hospital had up to 45 days to review the application, followed by an up to 45-day state review and another up to 60-day review from CMS. "We're still pressing against that December 31 deadline. Hopefully, we can have some sort of determination before that," Brett Fuller, an accountant work- ing with LCHA, told DailyTrib.com. "I do know that at least the communications with CMS have been positive at least in expediting their review." n

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