Not only do consolidated hospitals harm patients with higher prices and worse outcomes, but the shaky financial pictures that result habitually lead to massive cost-cutting and closures of unprofitable facilities, which put entire communities at risk of losing access to medical care. Private equity firms are using borrowed money to assemble medical empires across the country. The Hahnemann tragedy represents a new wrinkle in the concentration of the hospital industry: the emergence of private equity as a driving force. Freedman’s lucrative scheme could become a trend, where private equity firms find hospitals in urban areas attractive to developers and strip the assets. But the condemnations did nothing to stop the closure. Local politicians in Philadelphia and even presidential candidate Bernie Sanders spoke out, savaging Freedman as an avatar of greed. “This seems to have been plan all along, to buy this place, let it fail, and shut it down.” McHugh said. He made no improvements for 18 months, and then closed the facility with the intention of selling the real estate, which is set in a “ gateway location” for gentrification. In 2018, Paladin Healthcare, an entity owned by private equity baron Joel Freedman, bought Hahnemann as part of a small hospital portfolio. Hahnemann, a 171-year-old institution in Center City Philadelphia that serves primarily low-income patients of color, closed on September 6 in one of the more egregious cases of private equity wealth extraction. We have frequent patients that have cried, ‘Where am I going to go?’ They don’t know. “It’s just so messed up that this is all happening,” Lauren McHugh, a registered nurse for 17 years with Hahnemann University Hospital, said at a July rally protesting its closure. When applied to hospitals, the value-extraction strategy that private equity specializes in can lead to terrible outcomes for patients, medical staff, and communities.
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