Private equity might dodge state laws by partnering with healthcare nonprofits

It wasn’t billed as a takeover.

The nonprofit hospice where Washington state nurse Milli Palmer has worked for nearly two decades announced in October 2024 that it was entering a “joint venture” with Compassus, a private equity-backed home health company. The deal was billed as a 50/50 partnership between Compassus and Providence, Palmer’s employer.

But within months, Palmer said, her employer’s priorities shifted.

After Compassus assumed control over day-to-day operations at the hospice and home health company in May 2025, management began pushing nurses and case workers to see more patients during their eight-hour shifts, she said. Staff who had been doing 13-15 patient visits per week were pressured to complete 20-25 visits.

Meanwhile, some of Palmer’s colleagues were asked to lie on paperwork or backdate legal documents, she said. The new expectations have dramatically changed the job she loved, prompting some of her colleagues to quit. The hospice now employs more traveling nurses and is seeing fewer referrals, she said.

“It has really limited our ability to make sure that patients are safe in their home,” she told Stateline. “What ends up happening is our staff is so committed to our patients and communities that they will not provide substandard care, so that pushes them into overtime, and then that impacts their abilities to care for their own families.”

Providence declined Stateline’s request for an interview. Compassus did not respond to multiple requests for comment before publication.

Joint ventures in health care are not new. But private equity firms and nonprofits that co-own hospitals, urgent care clinics and home health agencies are partners with fundamentally different missions.

Nonprofit health systems are legally obligated to prioritize their community’s healthcare needs. In exchange for being exempt from paying most taxes, they must provide needed services that may not be profitable, and reinvest excess revenue into patient care and community health. Private equity firms generally focus on maximizing returns for investors, often within a few years.

As these joint ventures grow increasingly popular, they will test a wave of recent state laws that were designed to increase oversight of private equity in healthcare and prevent a repeat of the patient harm, hospital closures, mass layoffs and financial failures that have followed some of the industry’s most troubled investments.

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Last year, at least seven states enacted laws erecting guardrails around private equity’s involvement in healthcare. But some private equity critics are concerned that the recent state laws may not extend to the joint venture model.

“Policymakers need to take a look and make sure that they’re future-proofing their states’ regulations for stuff like this,” said Matt Parr, communications director with the Private Equity Stakeholder Project, a watchdog group that tracks private equity.

More than a fifth of private equity-backed hospitals in the U.S. are now owned through joint ventures with nonprofits, according to a new study from the Private Equity Stakeholder Project.

Proponents of joint ventures say private equity provides a stabilizing infusion of cash for nonprofits, as well as the expertise and connections to help them improve their operations and scale up their services. Nonprofit systems provide clinical expertise and a name the community trusts that can allow private equity entry to new markets.

“As our communities age, we have been thoughtfully evaluating how to best meet the growing need for these services,” Terri Warren, chief of community services at Providence, said in a news release announcing its joint venture with Compassus. Bringing in the private-equity backed partner, she said, would enable Providence to expand access to its hospice and home health services.

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Palmer, who lives in Renton, Washington, a Seattle suburb, has worked as a nurse since 1988 and joined Providence, which operates in several Western states, in 2007. Compassus, a Tennessee-based home health company with locations in 32 states, is owned by private equity firm TowerBrook Capital Partners and Catholic health system Ascension.

Their new joint venture rebranded Palmer’s employer as Providence at Home with Compassus.

“I think the public still sees us as Providence Hospice, not Providence at Home with Compassus, so they tend to blame the Providence system for what they see as a lack of response,” Palmer said. “I think Compassus is gleaning patients strictly on the Providence name.”

Investigations

One of the nation’s largest rural hospital operators is Lifepoint Healthcare, a company owned by private equity giant Apollo Global Management. Last year, a bipartisan U.S. Senate Budget Committee investigation found that underinvestment in a Lifepoint hospital in rural Iowa led to deteriorating conditions and worsening patient care even as Apollo investors made millions.

Lifepoint is an example of the growing reach of joint ventures: More than 60% of its hospitals are owned through such partnerships with nonprofit and other healthcare providers in multiple states, according to research from the Private Equity Stakeholder Project.

One of Lifepoint’s largest joint ventures is with the not-for-profit Duke Health, the top-ranked North Carolina health system that’s connected with Duke University and anchored by the highly rated Duke University Hospital.

Their joint venture, Duke LifePoint Healthcare, owns 15 acute care hospitals in Michigan, North Carolina, Pennsylvania and Virginia. Although Duke’s name comes first in the branding, Lifepoint owns 97% of the venture.

In recent years, some of the Duke LifePoint’s hospitals have been the subject of both state and federal investigations.

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Its hospital in Wilson, North Carolina, was at risk of losing federal Medicare funding three times in 2022 and 2023 for problems with patient safety and care. In one cited incident, a man was given contrast dye for a CT scan at the hospital, against his physician’s orders, which led to kidney damage that made him dependent on dialysis. The feds also cited the hospital for two 2022 incidents that they said resulted in patient deaths.

And the hospital was investigated by the North Carolina attorney general’s office for chronic understaffing and allegations the hospital reduced the amount of free or discounted care it provided to uninsured patients, and prioritized patient services with higher reimbursement rates.

Earlier this year a different Duke LifePoint hospital, in Hickory, North Carolina, faced an investigation over care quality problems.

The Lown Institute’s Hospital Index ranked four Duke LifePoint hospitals among the worst in North Carolina.

“To the average consumer patient, you’re going to a Duke LifePoint facility and expect a level of trustworthiness for the system that you know, but really it’s Lifepoint running most of the show,” said Parr, of the Private Equity Stakeholder Project.

Duke Health officials declined to comment on the investigations but in a statement to Stateline said the partnership is meant to pair Duke Health’s clinical expertise with Lifepoint’s experience supporting smaller community and rural hospitals.

“Duke Health joined the Duke LifePoint partnership to help strengthen access to high-quality care in communities where maintaining local healthcare services can be particularly challenging,” officials said in the statement.

In some cases, private equity investment has breathed life into healthcare enterprises. A 2017 case study out of West Virginia found that the formerly private equity-backed MedExpress urgent care chain benefitted rural Appalachian communities, lowering costs and reducing hospital crowding.

Proponents point out that many of the problems associated with private equity involvement also happen in other types of funding models, including publicly traded outfits or nonprofits. And some private equity firms have shifted away from extractive financial maneuvers and toward more responsible practices.

But critics are worried that increasing private equity interest will bring with it the bad actors that sacrifice care quality for the sake of boosting shareholder profits. They cite a growing body of research that indicates that the private equity model increases the likelihood of understaffing, poor patient outcomes and higher care costs.

Testing state laws

Palmer, the Washington state hospice nurse, said she and some of her coworkers have filed complaints about Compassus with the Washington state attorney general’s office, as well as the state labor department. Palmer is a member of the executive board at her local union that represents healthcare workers.

April Frazier, a hospice chaplain and Palmer’s coworker, said she’s filed a complaint because management told her and other employees to lie about missed patient visits. She said they were told to mark a missed visit as due to patient request, when it was actually the result of no staff member being available to make the visit.

Frazier has worked at Providence for 13 years and told Stateline the company has changed.

“A really big issue is taking on patients and making promises that they can be cared for, and it’s not possible due to lack of staffing,” Frazier said. For example, she said, some patients who are supposed to have aides help them with bathing can’t get that help because there aren’t enough bath aides. The aides who are available have been pressured to shorten their time with patients, she said.

“If somebody is frail and can’t move fast, their skin is delicate and they’re dying, it is disrespectful to try to rush a bath for the sake of productivity numbers,” Frazier said. “That’s the heartbreaking part, when we know what good care looks like and to be pressured to do less than that.”

The office of Washington state Attorney General Nick Brown, a Democrat, declined Stateline’s request for an interview. A representative said his office has a policy of not commenting on any potential investigations.

It remains to be seen whether new state laws that restrict private equity’s involvement in healthcare will extend to joint ventures with nonprofit systems, said Parr.

“It is interesting that as you get more legislation coming through in the last few years, we see private equity may be pivoting more toward this type of business model,” he said.

The announcement of Compassus’s joint venture with Providence triggered official reviews in states where the new home health companies would be operating, including California, Oregon and Washington. Those states have laws that require varying levels of oversight for proposed healthcare mergers or acquisitions.

While each state eventually approved the deal, Oregon spent more than a year reviewing it and extracted promises from the companies before signing off in May.

Oregon has one of the toughest laws in the country aimed at private equity. Passed last year, it strictly limits the power of non-physician-run companies, such as those backed by private equity, to control clinical and business decisions for medical practices.

In their initial report on the Providence-Compassus joint venture, Oregon regulators noted the conflicting goals of nonprofits and private equity firms: “To the extent providing better care to community members conflicts with profit objectives, for-profit owners would be expected to prioritize the latter.” They expressed concern that conflict could drive cost-cutting and revenue-maximizing strategies that could hurt patient care and access.

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More than 200 public comments were filed, most opposing the partnership.

Oregon eventually approved the deal earlier this year, with conditions: The joint venture must hold to its promise to invest $30 million in home health and hospice operations in the state over the next five years, and continue Providence’s community benefit programs.

As Palmer and her colleagues continue Washington state officials for help, she said she hopes they’ll take a harder look at how the joint venture is affecting her community. And she’s puzzled why Compassus, a company with years of experience providing hospice and home health care in other states, has adopted policies she believes have undermined care for her patients.

“I know our communities are used to a certain standard of care,” she said, “and if we don’t provide that, we’re not going to have a business here.”

Stateline reporter Anna Claire Vollers can be reached at [email protected]