Private Equity Health Scandals Aren’t Confined to Hospital Wards
September 30, 2026
The debate over private equity–owned health care focuses mainly on hospitals, doctors’ offices, and nursing homes. But private equity’s stumbles deserve attention even when they occur in institutions less visible, like jails or methadone clinics.
On September 21, Webster Equity Partners lost control of North America’s largest chain of opioid treatment clinics, BayMark Health Services, to its private creditors led by Ares Management, Oaktree Capital, and SLR Capital Partners. Meanwhile, what was once the largest US prison health provider is liquidating. Under four sets of private equity (PE) owners over fifteen years, YesCare and its predecessors went from serving 400,000 inmates to none.
Like many PE-owned businesses, BayMark took on debt that Medicaid cuts made unsustainable. To their credit, BayMark’s creditors are not disrupting drug withdrawal treatment for its 75,000 daily patients. However, BayMark under Webster’s ownership attracted the scrutiny of the Senate Finance Subcommittee on Health Care for two alleged deceptive practices. The subcommittee alleged that BayMark charged in full for therapy sessions that were cut short or never happened due to understaffing and needlessly forced patients to visit its clinics in person, rather than taking their medication more cheaply and conveniently at home. The Senate investigation is ongoing.
Mistreatment Scandals
YesCare’s predecessor Corizon Health was formed by a 2011 merger under the ownership of Beecken Petty O’Keefe & Company. For the next few years, it was by far the nation’s largest player in prison health. But the business—also owned over time by Blue Mountain Capital, Flacks Group, and Perigrove Capital—was embroiled in so many mistreatment scandals that it steadily lost government contracts.
Over a thousand lawsuits, mostly for medical malpractice, drove Corizon into bankruptcy in 2023. It would emerge as YesCare, with its assets cleansed of most liabilities, under a legal maneuver known as the “Texas two-step.” But under pressure from a group of senators led by Elizabeth Warren, a Texas federal bankruptcy judge approved a 2025 settlement under which YesCare’s new backers, including Perigrove’s Isaac Lefkowitz, would pay monthly into a $75 million fund for the benefit of prisoner claimants, in return for a shield from litigation.
The litigation shield lifted after YesCare’s backers fell behind on their payments. First in line for trial was an ex-prisoner named Kohchise Jackson. Jackson told a Detroit jury that the prison health firm forced him to wear a two-month colostomy bag for two years because it wouldn’t spend $1,000 to remove it. Within weeks of the litigation shield lifting, on April 2, 2026, the jury awarded Jackson $300 million in punitive damages. After the verdict, Alabama canceled the company’s biggest remaining contract, and YesCare’s fate was sealed. A new bankruptcy court began liquidation proceedings in May. Lawyers for the prisoners would like the court to look for fraudulent transfers and potentially claw back some of the funds that were distributed to insiders in the short period between the two bankruptcies. In the meantime, the last facilities to have used YesCare are scrambling with mixed success to provide continuity of care for 20,000 inmates and keep 1,500 health professionals paid.
What Lawmakers Should Do
People who are behind bars, struggle with behavioral disorders, or both, are not exactly a powerful political constituency. When lawmakers aim to constrain private equity in the health care sector, they usually target hospitals, physician practice groups, and (with less success) nursing homes. But as the NYU Stern Center for Business and Human Right’s spring 2026 report showed, PE ownership has produced scandals in a wide range of subsectors—with some of the nastiest episodes occurring in prison health care and behavioral health care. These two subsectors overlap heavily, because about 40 percent of the carceral population has a history of mental illness, and as many as 65 percent suffer from substance use disorder.
Behavioral health care should no longer be forgotten when new laws tighten oversight in other corners of health care. States across the country are strengthening their review of health care deals. But most of these laws apply only to hospitals and nursing homes (and not always nursing homes). As in California and Illinois, laws requiring strict notice and review for health care transactions should include deals to buy behavioral health clinics.
The Root Cause
The solution for prison health care is not to protect the industry from tort claims like Kohchise Jackson’s, as the industry would like. New York and Connecticut recently passed reforms worth emulating. In December, New York expanded the State Commission of Correction to include medical and behavioral health experts, funded new investigative staff, and gave a watchdog group the right to make spot inspections. In May 2026, Connecticut created a Correction Medical and Health Commission and added mental health experts to its prison ombudsman’s office
But even these thoughtful reforms don’t address the problem’s root cause. Commentators at institutions ranging from the Brennan Center for Justice to Fordham Law School to the Cicero Institute agree that prison scandals flow from contracts that structurally incentivize undertreatment by paying providers on a per-prisoner basis no matter how little care is provided. To better align profits with public health, lawmakers should either mandate that payments to prison health providers track the care or value provided, or stop outsourcing prison health care to the private sector.
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