Forbes July 8, 2024
In May 2024, Steward Health, a physician-owned hospital system, filed for bankruptcy. Because private equity firm Cerberus owned it from 2021 to 2020, many blamed private equity for this fiasco. In Congress and various states, policymakers are trying to curb the involvement of private equity in healthcare.
Private equity firms make money by practicing “buy low, sell high.” Using their own capital and borrowed cash, they purchase undermanaged targets with growth potential at low prices, reinvigorate them, and subsequently sell the now-healthy targets to new buyers at high prices. If a target is not improved, it will be sold at a lower price, and the private equity firm loses money. All transactions are voluntary.
How do private equity firms reinvigorate...
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