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What Financial Engineering Does to Hospitals - The Atlantic   

Riverton, Wyoming, a city of about 11,000 people at the feet of the Wind River mountain range, seems far away from the world of Big Finance. Yet like so much of America, Riverton has become well acquainted with the business that most epitomizes today’s Wall Street: private equity. In 2018, the local hospital, SageWest, was purchased by Apollo Global Management as part of the giant private-equity firm’s $5.6 billion deal to buy a chain of hospitals called LifePoint Health. Even before Apollo got involved, LifePoint had merged Riverton’s small hospital with the hospital half an hour away in Lander, the county seat. Vivian Watkins, a Riverton resident who once served as Wyoming’s economic-development director, told us that the idea sounded viable—at first. “They told us the new trend in hospitals is ‘centers of excellence,’ so you’ll have maternity care in one place and, say, orthopedics in another,” she said.

But in the Apollo era, Watkins and other Riverton residents concluded that, instead of dividing specialties between the two hospitals and beefing up the ones remaining at each location, hospital managers were simply stripping away essential services from their community. The drive to Lander isn’t hard in the summer, Watkins told us, but in the winter, the roads are often closed. Many more patients needed to be transported out of the county altogether. According to state data reported by The Wall Street Journal, the number of air-ambulance flights out of Fremont County grew sixfold from 2014 to 2019. “We went to the local CEO of both hospitals and said, ‘We’re quite concerned. What can we do to help? How can we keep services here?’” Watkins said. “To make a long story short, the answer was, ‘No, no, no—you don’t understand that we don’t want to do that.’” Apollo referred all questions about its role in Riverton to LifePoint. A spokesperson for LifePoint—which folded Riverton, Lander, and other hospitals into a new company called ScionHealth in 2021—said in an email that “our ownership structure had nothing to do with our approach to this market” and that “investment in the Riverton and Lander communities increased after the Apollo PE investment.”

A nascent effort by a group of prominent Riverton citizens to build a new hospital intensified after the Apollo takeover. In addition to raising several million dollars via community contributions and donated land for the new Riverton Medical District, the group just closed a $37 million loan from the U.S. Department of Agriculture, which uses taxpayer money to help rural development efforts. This is hardly the only time that government dollars have been used to clean up after, or subsidize, private-equity firms’ self-enrichment. In Watsonville, California, state officials kicked in to help buy a local hospital out of bankruptcy after its own brush with private equity. During the pandemic, many hospitals owned by private-equity firms, run by billionaires and themselves flush with cash, got loans and grants from taxpayers.

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