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mostlysignssomeportents · 2 months

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When private equity destroys your hospital

I'm on tour with my new novel The Bezzle! Catch me TOMORROW in PHOENIX (Changing Hands, Feb 29) then Tucson (Mar 9-10), San Francisco (Mar 13), and more!

As someone who writes a lot of fiction about corporate crime, I naturally end up spending a lot of time being angry about corporate crime. It's pretty goddamned enraging. But the fiction writer in me is especially upset at how cartoonishly evil the perps are – routinely doing things that I couldn't ever get away with putting in a novel.

Beyond a doubt, the most cartoonishly evil characters are the private equity looters. And the most cartoonishly evil private equity looters are the ones who get involved in health care.

(Buckle up.)

Writing for The American Prospect, Maureen Tcacik details a national scandal: the collapse of PE-backed hospital chain Steward Health, a company that bought and looted hospitals up and down the country, starving them of everything from heart valves to prescription paper, ripping off suppliers, doctors and nurses, and callously exposing patients to deadly risk:

https://prospect.org/health/2024-02-27-scenes-from-bat-cave-steward-health-florida/

Steward occupies a very special place in the private equity looting cycle. Private equity companies arrange themselves on a continuum of indiscriminate depravity. At the start of the continuum are PE funds that buy productive and useful firms (everything from hospitals to car-washes) using "leveraged buyouts." That means that they borrow money to buy the company and use the company itself as collateral: it's like you getting a bank-loan to buy your neighbor's mortgage out from under them, and using your neighbor's house as collateral for that loan.

Once the buyout is done, the PE fund pays itself a "special dividend" (stealing money the business needs to survive) and then starts charging the business a "management fee" for the PE fund's expertise. To pay for all this, the PE bosses start to hack away at the company. Quality declines. So do wages. Prices go up. The company changes suppliers, opting for cheaper alternatives, often stiffing the old company. There are mass layoffs. The remaining employees end up doing three peoples' jobs, for lower wages, with fewer materials of lower quality.

Eventually, that top-feeding PE company finds a more desperate, more ham-fisted PE company to unload the business onto. That middle-feeding company also does a leveraged buyout, pays itself another special dividend, cuts wages, staffing and quality even further. They switch to even worse suppliers and stiff the last batch. Prices go up even higher.

Then – you guessed it – the middle-feeding PE company finds an even more awful PE bottom-feeder to unload the company onto. That bottom feeder does it all again, without even pretending to leave the business in condition to do its job. The company is a shambling zombie at this point, often producing literal garbage in place of the products that made its reputation. Employees' paychecks bounce, or don't show up at all. The company stops bothering to pay the lawyers that have been fending off its creditors. Those lawyers sue the company, too.

That's the kind of PE company Steward Health was, and, as the name suggests, Steward Health is in the business of stripping away the very last residue of value from community hospitals. As you might imagine, this gets pretty fucking ugly.

Steward owns 32 hospitals up and down the country, though its holdings are dwindling as the company walks away from its debt-burdened holdings, after years of neglect that have rendered them unfit for use as health facilities – or for any other purpose. Tcacik's piece offers a snapshot of one such hospital: Florida's Rockledge Regional Medical Center, just eight miles from Cape Canaveral.

Rockledge is a disaster. The fifth floor was, at one point, home to 5,000 bats.

Five.

Thousand.

Bats.

(Rockledge stiffed the exterminators.)

The bats were just the beginning. One of the internal sewage pipes ruptured. Whole sections of the hospital were literally full of shit, oozing out of the walls and ceiling, slopping over medical equipment.

That's an urgent situation for any hospital, but for Rockledge, it's catastrophic, because Rockledge is a hospital without any hospital supplies. Steward has stiffed the companies that supply "heart valves, urology lasers, Impella catheters, cardiac catheterization balloons, slings for lifting heavier patients, blood and urine test reagents, and most recently, prescription paper." Key medical equipment has been repossessed. So have the Pepsi machines. The hospital cafeteria had its supply of cold cuts repossessed:

https://www.reddit.com/r/massachusetts/comments/1agc1j4/comment/kolicqo/

It's not just Steward's nonpayments that reek of impending doom. Its payments also bear the hallmarks of a scam artist on the brink of blowing off the con. The company recently paid off a vendor with five separate checks for $1m, each drawn on "a random hospital in Utah" (Steward recently walked away from its Utah hospitals; its partners there are suing it for stealing $18m on their way out the door).

This company – which owns 32 hospitals! – has resorted to gambits like sending photos of fake checks to doctors it hasn't paid in months as "proof" that the money was coming (the checks arrived 22 days later).

Steward owes so much money to its employees – $1.66m to just one doctors' group. But the medical staff keep doing their jobs, and are reluctant to speak on the record, thanks to Steward's reputation for vicious retaliation. Those health workers keep showing up to take care of patients, even as the hospital crumbles around them. One clinician told Tcacik: "I watched a bed collapse underneath a [patient] who had just undergone hip surgery."

Rockledge has nine elevators, but only five of them work – the other four have been broken for a year. The hospital's fourth floor has been converted to "a graveyard of broken beds." The sinks are clogged, or filled with foul gunk. There's black mold. Nurses have noted on the maintenance tags that the repair service refuses to attend the hospital until their overdue bills are paid. The fifteen-person on-site maintenance team was cut to just two workers.

Steward is just the latest looting owner of Rockledge. After the Great Financial Crisis, private equity consultants helped sell it to Health Management Associates. The hospital's CEO took home a $10m bonus for that sale and exited; Health Management Associates then quickly became embroiled in a Medicare fraud and kickback scandal. Soon after, Rockledge was passed on to Community Health Systems, who then sold it on to Rockledge.

Steward, meanwhile, was at that time owned by an even bigger private equity giant, Cerberus, which then sold Steward off. That deal was performatively complex and hid all kinds of mischief. Prior to Cerberus's sell-off of Steward, they sold off Steward's real-estate. The buyer was Medical Properties Trust, who gave Cerberus $1.25b for the real-estate: three hospitals in Florida and three more in Ohio. Steward then contracted to operate these hospitals on MPT's behalf, and pay MPT rent for the real-estate.

This complex arrangement was key to siphoning value out of the hospital and to keeping angry creditors at bay – if you can't figure out who owes you money, it's a lot harder to collect on the debt. The scheme was masterminded by Steward founder/CEO Ralph de la Torre. De la Torre is notorious for taking a massive dividend out of the company while it owed $1.4b to its creditors. He bought a $40m yacht with the money.

De la Torre was once feted as a business genius who would "disrupt" healthcare. But as Steward's private jet hops around "Corfu, Santorini, St. Maarten and Antigua" as its hospitals literally crumble, he's becoming less popular. In Massachusetts, politicians have railed against Steward and de la Torre (Governor Healey wants the company to leave the state "as soon as possible").

Florida, by contrast, is much more friendly to Steward. The state Health and Human Services Committee chair Randy Fine is an ardent admirer of hospital privatization and is currently campaigning to sell off the last community hospital in Brevard County. The state inspectors are likewise remarkably tolerant of Steward's little peccadillos. The quasi-governmental agency that inspects hospitals has awarded this shit-and-bat-filled, elevator-free, understaffed rotting hulk "A" grades for quality.

These inspectors jointly represent a mismatched assortment of private and public agencies, dominated by a nonprofit called Leapfrog, the brainchild of Harvard public-health prof Lucian Leape, who founded it in 2000. Leapfrog likes to tout its "transparent" assessment criteria, and Steward are experts at hitting those criteria, spending the exact minimum to tick every box that Leapfrog inspectors use as proxies for overall quality and safety.

This is a pretty great example of Goodhart's Law: "every measurement eventually becomes a target, whereupon it ceases to be a good measurement":

https://xkcd.com/2899/

But despite Steward's increasingly furious creditors and its decaying facilities, the company remains bullish on its ability to continue operations. Medical Properties Trust – the real estate investment trust that is nominally a separate company from Steward – recently hosted a conference call to reassure Wall Street investors that it would be a going concern. When a Bank of America analyst asked MPT's CFO how this could possibly be, given the facility's dire condition and Steward's degraded state, the CFO blithely assured him that the company would get bailouts: "We own hospitals no one wants to see closed."

That's the thing about PE and health-care. The looters who buy out every health-care facility in a region understand that this makes them too big to fail: no matter how dangerous the companies they drain become, local governments will continue to prop them up. Look at dialysis, a market that's been cornered by private equity rollups. Today, if you need this lifesaving therapy, there's a good chance that every accessible facility is owned by a private equity fund that has fired all its qualified staff and ceased sterilizing its needles. Otherwise healthy people who visit these clinics sometimes die due to operator error. But they chug along, because no dialysis clinics is worse that "dialysis clinics where unqualified sadists sometimes kill you with dirty needles":

https://www.thebignewsletter.com/p/the-dirty-business-of-clean-blood

The bad news is that private equity has thoroughly colonized the entire medical system. They took hospitals, fired the doctors, then took over the doctors' groups that provided outsource staff to the hospital:

https://pluralistic.net/2020/04/04/a-mind-forever-voyaging/#prop-bets

It's illegal for private equity companies to own doctors' practices (doctors have to own these), but they obfuscated the crime with a paper-thin pretext that they got away with despite its obvious bullshittery:

https://pluralistic.net/2020/05/21/profitable-butchers/#looted

The financier who decides whether you live or die depends on an algorithm that literally sets a tolerable level of preventable deaths for the patients trapped in the practice:

https://pluralistic.net/2023/08/05/any-metric-becomes-a-target/#hca

Private equity also took over emergency rooms and boobytrapped them with "surprise billing" – junk fees that ran to thousands of dollars that you had to pay even if the hospital was in network with your insurer. They made billions from this, and spent a many millions from that booty keeping the scam alive with scare ads:

https://pluralistic.net/2020/04/21/all-in-it-together/#doctor-patient-unity

The whole health stack is colonized by private equity-backed monopolies. Even your hospital bed!

https://pluralistic.net/2022/01/05/hillrom/#baxter-international

Then there's residential care. Private equity cornered many regional markets on nursing homes and turned them into slaughterhouses, places where you go to die, not live:

https://pluralistic.net/2021/02/23/acceptable-losses/#disposable-olds

The palliative care sector is also captured by private equity. PE bosses hire vast teams of fast-talking salespeople who con vulnerable older people into entering an end-of-life system before they are ready to die. Thanks to loose regulation, the nation is filled with fake hospices that can rake in millions from Medicare while denying all care to their patients (hospice patients don't get life-extending medication or procedures, by definition):

https://pluralistic.net/2023/04/26/death-panels/#what-the-heck-is-going-on-with-CMS

If you survive this long enough, Medicare eventually tells the hospice that you're clearly not dying and you get kicked off their rolls. Now you have to go through the lengthy bureaucratic nightmare of convincing the system – which was previously informed that you were at death's door – that you are actually viable and need to start getting care again (good luck with that).

If that kills you, guess what? Private equity has rolled up funeral homes up and down the country, and they will scam your survivors just as hard as the medical system that killed you did:

https://pluralistic.net/2022/09/09/high-cost-of-dying/#memento-mori

The PE sector spent more than a trillion dollars over the past decade buying up healthcare companies, and it has trillions more in "dry powder" allocated for further medical acquisitions. Why not? As the CFO of Medical Properties Trust told that Bank of America analyst last week, when you "own hospitals no one wants to see closed." you literally can't fail, no matter how many people you murder.

The PE sector is a reminder that the crimes people commit for money far outstrip the crimes they commit for ideology. Even the most ideological killers are horrified by the murders their profit-motivated colleagues commit.

Last year, Tkacic wrote about the history of IG Farben, the German company that built Monowitz, a private slave-labor camp up the road from Auschwitz to make the materiel it was gouging Hitler's Wehrmacht on:

https://pluralistic.net/2023/06/02/plunderers/#farben

Farben bought the cheapest possible slaves from Auschwitz, preferentially sourcing women and children. These slaves were worked to death at a rate that put Auschwitz's wholesale murder in the shade. Farben's slaves died an average of just three months after starting work at Monowitz. The situation was so abominable, so unconscionable, that the SS officers who provided outsource guard-labor to Monowitz actually wrote to Berlin to complain about the cruelty.

The Nuremberg trials are famous for the Nazi officers who insisted that they were "just following order" but were nonetheless executed for their crimes. 24 Farben executives were also tried at Nuremberg, where they offered a very different defense: "We had a fiduciary duty to our shareholders to maximize our profits." 19 of the 24 were acquitted on that basis.

PE is committed to an ideology that is far worse than any form of racial animus or other bias. As a sector, it is committed to profit above all other values. As a result, its brutality knows no bounds, no decency, no compassion. Even the worst crimes we commit for hate are nothing compared to the crimes we commit for greed.

If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

https://pluralistic.net/2024/02/28/5000-bats/retaliation#charnel-house

#pluralistic #Rockledge Regional Medical Center #private equity #looting #Steward Health #ponzis #maureen tcacik #Medical Properties Trust #Ralph de la Torre #Massachusetts #florida #Cerberus #too big to fail #pe #guillotine watch

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southeastasianists · 2 years

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Cambodia is calling on the UK government to help it recover antiquities it says were stolen from its temples.

The country's culture minister says the Victoria & Albert and British Museums both have looted objects.

The museums said they were transparent about items' origins.

The V&A welcomed "constructive dialogue". The British Museum said it would consider requests "carefully and respectfully".

In a letter to her British counterpart Nadine Dorries, Cambodian culture minister, Phoeurng Sackona, says many important cultural treasures were stolen from sacred temples and "wrongfully ended up" in warehouses and institutions - including the two London museums.

The Cambodians - who believe ancient statues hold the souls of their ancestors - have pinpointed that many of the stolen works passed through the hands of a rogue British art dealer, Douglas Latchford, who died in 2020.

The focus on the UK marks the latest phase in the Cambodians' campaign to recover the country's most precious carvings and statues that were pillaged and then sold on to Western museums and private collectors.

The Cambodian Ministry of Culture's chief legal counsel and the head of its investigative team, Brad Gordon, told the BBC that the trade in these items could be considered a war crime. The Cambodian minister's letter reminded the UK that both countries were party to the Hague Convention, which aims to protect cultural property during armed conflicts.

The murderous Khmer Rouge regime held power from 1975 to 1979, when it is thought to have killed more than two million of its own people, and the group controlled large portions of the country until the late 1990s. Much of the looting took place over this three-decade period of civil war and strife.

"This was a time of conflict. The whole world knew it," Brad Gordon says. "Large museums like the British Museum or the V&A, they shouldn't have accepted these pieces."

He adds: "We would say, for the majority of pieces, there is no export licence, there is no permit. So these museums and these individuals are in receipt of stolen property and the stolen property needs to come back."

The two London museums have now each received a list of the items that the Cambodian authorities believe they have in their collections. The British Museum is believed to have approximately 100 Cambodian pieces, though all appear to be in storage.

Some of the museum's pieces rank near the top of the Cambodians' priority list for return. The V&A is thought to have more than 50 items; a fraction of them are on display.

In a statement, the British Museum said: "We are open and transparent about the heritage of objects in our permanent collection. Establishing the provenance of an object has been an integral part of the Museum's acquisition process for decades. Through this research, we also endeavour to find any possible ethical or legal issues. Each object goes through a careful and thorough process before the Trustees make a decision to acquire it."

The V&A told us it took steps to ensure as much information as possible about V&A objects was available to researchers.

It continued: "Information about our Cambodian objects, including their provenance, has been accessible on our online database since its launch in 2009. Research into our collections is continuous and new information is added to the database."

Both museums said they would respond to the Cambodians' letters.

"The statues are definitely not just the stone for us. We believe the statues have souls," explains Sopheap Meas, an archaeologist on the investigative team.

Seeing the temples' statues broken into pieces makes Sopheap feel nauseous. She explains that to Cambodians, a statue can contain the soul of a king, a god or maybe an ancestor.

"So when the head was cut and the foot, the leg was destroyed, it's just like people and somebody cut off their heads."

This wasn't a colonial crime. In contrast to the Elgin Marbles taken from Greece or the Benin Bronzes removed from what is now Nigeria, much of the looting of Cambodian items took place in living memory - in the 1980s, 90s and early 2000s.

The BBC was given exclusive access to former looters who stole items from Cambodian temples.

They've all been given code names by the Cambodian investigative team to protect their identities from others who might not be happy they're being so open about their past activity.

One looter, known as Iron Princess, says she worked almost every day in the 1990s to systematically dismantle one of Cambodia's biggest temple complexes, Preah Khan Kampang Svay, in the north of the country.

"At the time there was no other work to do besides looting," she explains.

"Because there were so many traders, we sold to whoever paid the most," she adds.

After being shown a catalogue of Cambodian items that are held by the V&A in London, Iron Princess picks out several artefacts, including bronze and sandstone statues, that she says she removed from the remote temple complex, Preah Kahn Kampang Svay.

Another former looter, known as Red Horse, takes us to a remote temple near northern Cambodia's Kulen Mountain. There, he shows us the place where he says his gang removed a large male deity statue in the 1970s. He clearly identifies it in the British Museum catalogue.

"We dug down and lifted it out, two people on each side," he says. "Then we used a stretcher [to carry it]."

Cambodian investigators have carefully traced the statue's journey. They're confident the one Red Horse identifies matches the artefact held by the British Museum.

This is just one story - there are thousands of others. In targeted excavations at temples across the country, archaeologists look for evidence to back up the looters' stories. They also search for left-behind fragments that might match statues in foreign museums.

That strategy has worked. In 2014, two of Cambodia's most-wanted statues, a pair of warriors, were returned to Phnom Penh after French archaeologists matched pedestals with feet to statues in US collections.

American prosecutors have been actively targeting US museums and collectors, asking them to justify their Cambodian acquisitions.

Iron Princess and Red Horse both sold most of their finds through a Cambodian man named Lion. He was sick with cancer when Cambodian investigators made contact with him, but he worked with the team right up to his death last year.

It's through Lion that the team really began to understand how the system operated. There were two men who masterminded the selling off of treasures in the 1980s and 90s: Lion and Douglas Latchford. The British art dealer was so prominent that the Cambodian minister of culture has named him in her letter to the UK, noting that many stolen objects passed through his hands.

Outwardly, Latchford presented himself as an expert on Cambodian art, even publishing several large art books full of glossy photographs of items in Western collections. However, many had suspicions that he wasn't operating above board. Where were all these Cambodian works coming from in the later decades of the 20th Century, right when the country was consumed by violence?

Douglas Latchford always claimed his business was legitimate. He also insisted that if the statues had not been removed from Cambodia they would most likely, as he put it, have been shot up for target practice by the Khmer Rouge.

In 2012, he was mentioned by US prosecutors in a case targeting New York dealers.

US prosecutors closed in on Latchford himself. In 2019, he was subjected to his own indictment - 25 pages detailing his alleged crimes, from smuggling to selling stolen antiquities. He died the following year, before going to trial.

Latchford's family has supplied a vast trove of shipping records and emails to the Cambodian authorities. The documents confirmed many of the suspicions about him. Brad Gordon says Latchford was double-dealing right until his death.

"He was trying to offload his collection right up until he went into the hospital right before he died," Brad Gordon says of Latchford.

Douglas's daughter, Julia Latchford, stresses that legal ownership of the entire collection has been transferred to the Cambodian authorities. So far five major objects from Latchford's private collection have been physically repatriated, with a promise to return the rest.

Some in Cambodia have become tired of waiting. They want their gods to return home.

There are those, like the archaeologist Sopheap Meas, who would ideally like to see statues back in their original temples.

"I think the statue [was] just made for here," she says, gesturing to empty temples behind her, in the Preah Khan Kampang Svay complex. "They need to come back to our country, our people because people need to pray."

Many in Cambodia would love to see their temples fully restored. But the country simply doesn't have the museum space or resources to take everything back. They have a priority list of the most important pieces they want returned immediately.

They say they're not looking to empty Western museums of all Cambodian treasures. What they do want is institutions like the British Museum and the V&A to change their signs - acknowledging that these objects belong to the people of Cambodia.

#Southeast Asia #Cambodia #Art #Archaeology #Looting

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