WASHINGTON — America’s biggest Catholic hospital process, Ascension, has quietly developed out a strikingly uncommon non-public equity operation well worth extra than $1 billion, a STAT investigation has identified.

The investigation reveals how much a rich, religious, tax-exempt wellness process can migrate toward behaving like a Wall Avenue company — and how tiny this kind of a system has to disclose about no matter whether or how its revenue are benefiting sufferers.

Ascension, a much more than 140-hospital behemoth based in St. Louis, Mo., has employed its wealth to make a complex investment decision strategy including a partnership with a personal fairness business referred to as TowerBrook Funds Companions. When quite a few other nonprofit hospitals have dabbled in non-public equity investing, Ascension’s technique is much more formalized and more expansive than what other people have pursued so far. Ascension and TowerBrook started investing jointly in late 2015.


“That is quite an intense and controversial strategy, and it is not crystal clear how people investment decision incomes or returns are aligned with Ascension’s charitable mission,” explained Ge Bai, a Johns Hopkins College professor of accounting and health and fitness plan.

Their initially joint financial commitment poured $200 million into an embattled personal debt selection and billing company. Prior to the Ascension and TowerBrook expenditure, the business experienced been accused of illegally seeking to gather revenue from clients, together with when they were nevertheless in the crisis home. Ascension signed a prolonged-time period agreement with the enterprise, way too, which buoyed the company’s funds.


In April of this year, minority shareholders in the firm, R1 RCM, submitted a lawsuit accusing Ascension and TowerBrook of teaming up to extract $105 million years before they have been meant to.

STAT’s investigation, released Tuesday, is centered on interviews with approximately two dozen educational authorities, monetary analysts, accountants, and group organizers and a evaluate of extra than 3,500 webpages of monetary disclosures, lawsuits, and previously undisclosed internal money files.

Two popular Ascension executives experienced a major function in advancing Ascension’s personal fairness tactic, and in 2019 remaining their work opportunities primary the healthcare facility technique for internal roles overseeing Ascension’s investments as an alternative. Each created noticeably far more money in their new economical management roles in 2019 than they did as top rated executives — they even produced additional than the present-day CEO of the medical center procedure, in accordance to tax filings.

Ascension states the purpose of its financial commitment system is to fund its charity work, particularly “generating capital gains that can be re-invested to help Ascension’s Mission to treatment for people who are lousy and vulnerable,” according to its web site.

But though Ascension’s over-all financial investment cash flow has considerably enhanced due to the fact 2015, the amount of treatment the medical center presents for cost-free to needy sufferers has stayed about the very same, about the average for nonprofit well being programs. It is difficult to observe how a great deal of that profits may possibly be directed to plans to assist needy clients, as it feeds into Ascension’s basic equilibrium sheet.

And even with extra cash flow from its investments, Ascension chose to pursue cuts to at least two basic safety-web hospitals in Washington, and Milwaukee, Wis., starting in 2017 and 2018, respectively. The two initiatives prompted harsh criticism from group leaders.

“For Ascension to say, ‘We are heading to chase revenue down and profiteer to give the cash away to folks,’ I do not believe that that,” explained Roderic Woodson, a previous member of the D.C. hospital’s board.

STAT attained out to Ascension with a lot more than 40 queries for this tale. Spokesman Gene Ford declined to remark.

By Ellish