A 3% Stake Put Duke's Name on 16 Hospitals

Introduction

Duke Health's name is on 16 hospitals across North Carolina, Virginia, Pennsylvania, and Michigan. The private equity firm Apollo Global Management owns 97% of the joint venture behind that name. Duke's own share is 3%, bought in 2013 for about $700,000 through an affiliated nonprofit.

If the hospital nearest you carries a trusted nonprofit brand like Duke, Ascension, Mercy Health, CommonSpirit, Providence, or Penn Medicine, a private equity firm may already hold the majority economic stake behind that name, and no law requires anyone to tell you which facilities are set up this way. Those names, and roughly two dozen more, all turn up as joint-venture partners in a new report from the Private Equity Stakeholder Project, published July 6.

Plenty of other reporting has already covered whether private-equity-run hospitals deliver worse care. This report is about the structure itself: by partnering with a nonprofit's brand, board seats, and license instead of buying the hospital outright, a PE firm captures the economics while sidestepping the reviews a sale would trigger, state attorney general conversion review, federal premerger notice, and the bans many states place on non-doctors owning medical practices. The nonprofit's ownership never formally changes, so none of those reviews fire.

How a 3% Stake Buys a Brand

Duke Lifepoint Healthcare is the joint venture, and Duke University Health System's piece of it sits inside an affiliated nonprofit called Duke Quality Network, which contributed almost $700,000 for a 3% stake back in 2013. Lifepoint holds the other 97%, and it is owned by Apollo, which acquired the company in 2018. Duke lends the name and reputation; Apollo's Lifepoint owns nearly all the economics and runs the hospitals.

Two numbers get blurred in most coverage, and they're worth keeping apart. 61% is the share of Lifepoint's own hospitals that operate as joint ventures with nonprofits, out of 137 hospitals total. 97% is Lifepoint's equity stake in one of those ventures, Duke Lifepoint, specifically. Different denominators. Lifepoint's largest partners by facility count read like a roster of respected systems: Duke with 17 facilities, Mercy Health with 9, Ascension with 8, plus ventures alongside Penn Medicine, Trinity Health, CommonSpirit, UC Davis, and the University of Alabama at Birmingham. As PESP's Ryan Leitner told MedPage Today, a private equity entity "may have as much as a 49% or even a 97% ownership of a big-name nonprofit hospital" with none of it visible to the patient walking in.

So why does a for-profit-backed company get to keep a tax-favored nonprofit's name on a hospital it mostly owns? Two IRS revenue rulings. In 1998, Revenue Ruling 98-15 set out when a 501(c)(3) could enter a "whole hospital" joint venture with a for-profit partner and keep its tax exemption: nonprofit board control, charitable purpose on top, "commercially reasonable" management contracts. Revenue Ruling 2004-51 loosened the standard six years later for smaller "ancillary" ventures. Both rulings, the report notes, predate the arrival of large private-equity-backed healthcare companies, and the IRS hasn't updated either one in the two decades since.

Nothing Was Sold, So Nothing Was Reviewed

Consider what a straight sale would have set off. In California, any transfer of control of a nonprofit health facility worth more than $3 million triggers attorney general review: a public meeting, a test of whether the price is fair, and an independent assessment of what the deal does to the community's access to care. A joint venture skips the whole process, because the nonprofit's legal ownership stays put. What moves instead is the management authority, the board-appointment rights, and the cash.

The clearest sign that this is the point rather than a side effect comes from the operators themselves. Ardent Health, a publicly traded company (it went public in June 2024) majority-owned by the investment firm Equity Group Investments rather than a classic buyout fund, described the JV model's appeal in its 2018 SEC filing as including "an effective voice in the local and state regulatory process through not-for-profit leadership." That last phrase is the one that gets me: the nonprofit partner's standing is itself the feature. Ardent's own Form 10-K is plainer still about who runs things: "In each of these partnerships, we are the majority owner and serve as the day-to-day operator," with the nonprofit keeping "an economic ownership interest." Eighteen of Ardent's 30 hospitals work this way, and JV and related entities brought in 28% of its 2025 revenue, $1.8 billion out of $6.3 billion.

The nonprofit's "control" can be thinner than it looks. Duke Lifepoint bought its controlling stake in Wilson Medical Center, the only hospital in Wilson County, North Carolina, from the county for about $60 million in 2014. Between 2022 and 2023, state surveyors hit the hospital with three separate "immediate jeopardy" citations in under a year, and CMS threatened to cut off its Medicare funding. A North Carolina assistant attorney general, Llogan Walters, wrote to Lifepoint that the state was "extremely concerned about patients' ability to access quality healthcare" there. Then in September 2025, the local nonprofit created as part of the original deal, the Healthcare Foundation of Wilson, sued the joint-venture entity, saying it had "little actual power and almost no management power" over the hospital despite holding board seats.

Who Benefits

The cash flows to the majority owner, which is nearly always the private equity side. Ardent's filings state the rule outright: losses and cash distributions get split "pro rata based upon the respective ownership interest." When your interest is 61%, 80%, or 97%, most of the money is yours, and the nonprofit's name and referral network came cheap. On top of the operating cash sits a second stream: real estate. In 2019, the year after Apollo bought Lifepoint, the company sold the Conemaugh hospital real estate in Johnstown, Pennsylvania to a REIT, Medical Properties Trust, for $700 million, then leased it back over 20 years. Pennsylvania state representative Frank Burns, whose district includes Johnstown, said the arrangement "makes money via rent payments for shareholders of Apollo while putting Conemaugh Hospital in debt."

The structure buys two things money can't directly purchase. One is brand access: the operator enters new markets "using the name, reputation, and relationships associated with well known academic or not-for-profit health systems." The other is regulatory cover, because each individual joint venture is small enough to slip under federal premerger review even as the operator builds market power across dozens of them, and the nonprofit stays the licensed operator of record, so the corporate-practice-of-medicine rules read as satisfied on paper.

There's a beneficiary closer to the boardroom, too. When Ascension built its own private equity arm with TowerBrook Capital, several executives moved from running hospitals to running investments, and their pay moved with them. Former CEO Anthony Tersigni's compensation rose from $7.4 million to $10.6 million, a 43% jump, and former CFO Anthony Speranzo's more than tripled, from $3.2 million to $10.9 million. Former COO Craig Cordola moved from $5.3 million to $6.3 million. Ge Bai, a health-policy professor at Johns Hopkins, called steering charitable-hospital money into these vehicles "quite an aggressive and controversial strategy," one where it "is not clear how those investment incomes or returns are aligned with Ascension's charitable mission."

The Fix Everyone Proposes Wouldn't Touch This

If you followed the other private equity hospital stories this year (Steward Health's collapse, the nursing-home staffing cuts), the intuitive answer is to stop private equity from buying hospitals. This report makes the case that such a fix would miss almost everything it's aiming at. Apollo never bought Duke's hospitals, and Ardent operates most of its own without owning them outright. The 500-plus facilities in the report were never acquired in a way a ban would recognize, so a law written around acquisitions leaves them untouched.

California came closest to writing that law, and it shows how the gap survives a direct attempt. AB 3129, introduced by Attorney General Rob Bonta and Assemblymember Jim Wood, would have required private equity firms to get the attorney general's written consent 90 days before acquiring or taking control of a California health facility. Before it reached the governor's desk, the state Senate amended it to exempt hospital acquisitions outright. Governor Gavin Newsom then vetoed it on September 28, 2024, saying the state's newer Office of Health Care Affordability was the more appropriate body to review consolidation and was already doing much of that work. That office still holds authority to review deals and refer them to the attorney general. One more piece of the picture: the California Hospital Association, which represents more than 400 hospitals, many of them the same nonprofits signing these joint ventures, opposed the bill.

The counter-argument deserves a hearing. Anthony Lo Sasso, a University of Wisconsin economist, told The Guardian that "the so-called non-profit sector doesn't in any way behave differently than the for-profit sector," and that PE capital can fund staffing a struggling hospital couldn't manage alone. Some ventures do post real gains: OhioHealth's home-care partnership grew its patient count by more than half two years in. If anything, that example supports the report's point more than it undercuts it. The question a conversion review exists to ask, whether a deal is fair and what it does to a community's access to care, simply never gets asked when the deal is framed as a partnership, so no one is weighing the answer either way.

The Bottom Line

The uncomfortable part is that the mechanism is legal, and nobody broke a rule doing it. A federal tax safe harbor written in 1998, the year before Duke Lifepoint's first hospitals opened, still governs deals built for a private equity industry that has since put more than $1 trillion into healthcare. PESP's leading recommendation is that the IRS update the guidance to weigh the full economic relationship, management fees and sale-leasebacks and related-party contracts included. As executive director Jim Baker told The Guardian, "it's private, so they don't have to report what they own... We think this just scratches the surface."

Which leaves you, the patient, in a strange spot. You can find out in a minute whether your hospital is a nonprofit. Finding out whether a private equity firm holds most of the economics behind that name is far harder, because the report that found 500-plus of these arrangements calls its own count an undercount, limited to deals visible in public records. The reviews built to catch a change of control are still waiting on a sale that, by design, never arrives. The real question is who moves first, the IRS on its guidance or the states on their review laws, and whether either acts before the next trusted nonprofit name goes up over a hospital a private equity firm actually owns.