Key Takeaways
- • More than one-fifth of private equity-backed hospitals operate through joint ventures with nonprofit partners, a structural arrangement that may allow PE firms to circumvent state healthcare regulations designed for nonprofit entities.
- • Compassus, a private equity-backed home health company, assumed operational control of a Washington state nonprofit hospice in May 2025 following a October 2024 "joint venture" agreement initially presented as a 50/50 partnership, illustrating how PE firms can gain de facto control through partnership structures.
- • Staff productivity expectations at the Compassus-operated hospice increased dramatically post-takeover, with nurses pressured to complete 20-25 patient visits per shift versus the prior 13-15 visits, raising patient safety and care quality concerns.
- • Private equity and nonprofit healthcare partners operate under fundamentally misaligned missions—profit maximization versus charitable care—creating structural conflicts that may compromise the regulatory and operational safeguards traditionally applied to nonprofit healthcare entities.
Summary
Private equity firms are increasingly leveraging joint venture structures with nonprofit healthcare organizations to potentially sidestep state regulations designed specifically for nonprofit operators. According to reporting on the Providence Healthcare partnership with Compassus, more than one-fifth of PE-backed hospitals now operate through joint venture arrangements with nonprofits, a trend that raises significant questions about regulatory oversight and operational control.
The Compassus-Providence case provides a concrete example of how these arrangements function in practice. When Providence, a Washington state nonprofit hospice and home health employer, announced a partnership with Compassus in October 2024, the structure was presented as an equal 50/50 joint venture. However, within months of Compassus assuming day-to-day operational control in May 2025, the organization's practices shifted materially. Staff were pressured to increase patient visits from 13-15 per week to 20-25 per shift, and according to nurse Milli Palmer, colleagues faced requests to falsify or backdate legal documents.
These operational changes have had measurable consequences. Increased productivity demands have prompted staff departures, expanded reliance on traveling nurses, and notably reduced patient referrals to the organization. Palmer characterized the changes as compromising patient safety, noting that committed staff respond by working overtime rather than reducing care quality—ultimately creating burnout that affects their personal circumstances. Both Providence and Compassus declined to provide substantive responses to inquiries about these practices.
The structural tension underlying these partnerships is fundamental: private equity investors prioritize financial returns and operational efficiency, while nonprofit healthcare entities traditionally operate under a charitable mission focused on community care. This mission misalignment becomes particularly acute when PE firms gain operational control while the nonprofit entity retains regulatory status. The regulatory framework governing nonprofit healthcare—including tax exemptions, state oversight, and community benefit requirements—assumes decision-making authority remains aligned with nonprofit mission. Joint venture structures that decouple nominal ownership from actual operational control create ambiguity about which entity's obligations apply in practice, potentially allowing PE operators to extract value while nonprofit partners bear regulatory accountability.
The Compassus-Providence case provides a concrete example of how these arrangements function in practice. When Providence, a Washington state nonprofit hospice and home health employer, announced a partnership with Compassus in October 2024, the structure was presented as an equal 50/50 joint venture. However, within months of Compassus assuming day-to-day operational control in May 2025, the organization's practices shifted materially. Staff were pressured to increase patient visits from 13-15 per week to 20-25 per shift, and according to nurse Milli Palmer, colleagues faced requests to falsify or backdate legal documents.
These operational changes have had measurable consequences. Increased productivity demands have prompted staff departures, expanded reliance on traveling nurses, and notably reduced patient referrals to the organization. Palmer characterized the changes as compromising patient safety, noting that committed staff respond by working overtime rather than reducing care quality—ultimately creating burnout that affects their personal circumstances. Both Providence and Compassus declined to provide substantive responses to inquiries about these practices.
The structural tension underlying these partnerships is fundamental: private equity investors prioritize financial returns and operational efficiency, while nonprofit healthcare entities traditionally operate under a charitable mission focused on community care. This mission misalignment becomes particularly acute when PE firms gain operational control while the nonprofit entity retains regulatory status. The regulatory framework governing nonprofit healthcare—including tax exemptions, state oversight, and community benefit requirements—assumes decision-making authority remains aligned with nonprofit mission. Joint venture structures that decouple nominal ownership from actual operational control create ambiguity about which entity's obligations apply in practice, potentially allowing PE operators to extract value while nonprofit partners bear regulatory accountability.
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