November 29, 2021

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Ascension overall health technique is functioning a Wall Street-design and style personal equity fund

WASHINGTON — America’s greatest Catholic clinic system, Ascension, has quietly developed out a strikingly uncommon personal equity operation well worth more than $1 billion, a STAT investigation has discovered.

The investigation reveals how far a rich, religious, tax-exempt overall health program can migrate towards behaving like a Wall Avenue firm — and how small this kind of a program has to disclose about no matter whether or how its income are benefiting sufferers.

Ascension, a a lot more than 140-clinic behemoth dependent in St. Louis, Mo., has applied its prosperity to build a complex financial investment strategy such as a partnership with a personal equity business named TowerBrook Money Companions. Though numerous other nonprofit hospitals have dabbled in non-public fairness investing, Ascension’s tactic is much more formalized and extra expansive than what other folks have pursued so considerably. Ascension and TowerBrook started investing jointly in late 2015.

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“That is quite an aggressive and controversial tactic, and it is not apparent how these investment decision incomes or returns are aligned with Ascension’s charitable mission,” mentioned Ge Bai, a Johns Hopkins University professor of accounting and overall health policy.

Their initial joint financial investment poured $200 million into an embattled financial debt collection and billing business. Prior to the Ascension and TowerBrook expense, the business had been accused of illegally attempting to obtain cash from people, like when they ended up even now in the crisis space. Ascension signed a long-expression agreement with the enterprise, much too, which buoyed the company’s finances.

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In April of this yr, minority shareholders in the corporation, R1 RCM, submitted a lawsuit accusing Ascension and TowerBrook of teaming up to extract $105 million many years just before they ended up meant to.

STAT’s investigation, released Tuesday, is dependent on interviews with approximately two dozen academic specialists, economic analysts, accountants, and group organizers and a evaluate of much more than 3,500 webpages of fiscal disclosures, lawsuits, and formerly undisclosed inside financial documents.

Two well known Ascension executives had a substantial role in advancing Ascension’s private fairness system, and in 2019 left their careers foremost the healthcare facility technique for internal roles overseeing Ascension’s investments as an alternative. Each built noticeably extra money in their new money administration roles in 2019 than they did as top executives — they even created a lot more than the present CEO of the medical center process, in accordance to tax filings.

Ascension states the target of its investment decision tactic is to fund its charity do the job, especially “generating money gains that can be re-invested to support Ascension’s Mission to care for people who are inadequate and susceptible,” according to its web page.

But while Ascension’s overall expenditure earnings has significantly amplified due to the fact 2015, the degree of care the healthcare facility delivers for no cost to needy patients has stayed about the very same, about the average for nonprofit health methods. It is hard to monitor how a lot of that money may possibly be directed to plans to help needy sufferers, as it feeds into Ascension’s basic balance sheet.

And even with excess earnings from its investments, Ascension selected to pursue cuts to at the very least two protection-internet hospitals in Washington, and Milwaukee, Wis., commencing in 2017 and 2018, respectively. Both of those efforts prompted severe criticism from neighborhood leaders.

“For Ascension to say, ‘We are heading to chase money down and profiteer to give the dollars away to persons,’ I really don’t think that,” claimed Roderic Woodson, a previous member of the D.C. hospital’s board.

STAT arrived at out to Ascension with a lot more than 40 queries for this story. Spokesman Gene Ford declined to comment.