File 02 · Acute care · 1990–2026
Hospitals
A hospital is a bad candidate for a short-term financial owner. The exits are slow, the customers are sick, and the building is the service. Private equity bought them anyway. The pattern that shows up in bankruptcy court is consistent: borrow against the system, sell the real estate to a trust, dividend cash to investors, and pay rent and interest out of the operating budget that used to pay for staff and supplies. Peer-reviewed work now measures what that does on the floor. It is not a story about one reckless CEO, though it has those. It is a structure.
More Perfect Union’s reporting on Crozer-Chester followed the money out: a loan, a dividend toward investors, a new rent bill, a lawsuit, a bankruptcy, and then the closure of a Pennsylvania county’s hospitals.
Findings
- On the floor
- +25.4%
- The building
- 25% vs 4%
- How wide
- 488 hospitals
Kannan, Bruch, and Song, JAMA (2023): after private-equity acquisition, Medicare patients saw a 25.4% increase in hospital-acquired conditions, driven by falls (+27.3%) and central-line infections (+37.7%), despite fewer central lines. In-hospital mortality dipped slightly; 30-day mortality did not change in a statistically clear way.
A 2025 BMJ study of hospitals whose real estate was bought by investment trusts found 25% had closed or gone bankrupt by the end of 2024, against 4% of matched hospitals. Adjusted hazard ratio about 5.7. Most other quality measures in that paper did not move. Survival of the institution did.
A 2026 report from Sen. Chris Murphy’s office counted 488 U.S. hospitals owned or operated by private equity. A separate line of research, described in STAT by physicians who published it, found hospitals lost on the order of a quarter of their real assets within two years of a PE deal — about $28 million a hospital.
The playbook, in this industry
- 01
Acquire a system that still owns its campus
The valuable part is often the land and the monopoly on emergency care, not a clever operating insight. Financially healthier hospitals were, in one study, more likely to be bought — they can carry new debt.
- 02
Dividend recap and sale-leaseback
Borrow in the hospital’s name and send cash to owners. Sell campuses to a real-estate investment trust and lease them back. The hospital’s mission now includes a landlord.
- 03
Staff to the spreadsheet
Nursing ratios, ancillary services, and supplies are where ‘efficiency’ shows up. The JAMA signal — more falls, more line infections — is what understaffing looks like in a chart review.
- 04
Exit before the rent does
Sponsors can sell their equity years before the operating company fails. Cerberus has said it saved an insolvent Catholic system and left before the 2024 bankruptcy. The hospitals were still tenants.
Incidents
1997–2003
Columbia/HCA
The giant for-profit chain is investigated for Medicare fraud and pays settlements that, combined, exceed a billion dollars. The lesson the industry takes is not ‘stop consolidating.’
2010
Cerberus and Caritas Christi
The Massachusetts Catholic system becomes the seed of Steward Health Care. Expansion follows, across states, with the private-equity sponsor in the background of a brand patients experience as a hospital.
2016
Steward’s sale-leaseback
Medical Properties Trust buys Steward real estate. Cash comes out. Rent goes onto the hospitals. Later reporting describes facilities that struggled to pay for ordinary supplies and repairs.
2018
Prospect’s loan
More Perfect Union reports that about two years after buying Crozer Health, Prospect took a $1.1 billion loan and directed nearly half of it to investors. Crozer, the newsroom reported, was paying on the order of $35 million a year in rent.
2024–25
Bankruptcies and dark campuses
Steward files in May 2024. The Senate holds CEO Ralph de la Torre in contempt. Prospect files in January 2025 and closes its last Delaware County hospitals, including Crozer-Chester. Communities lose the ER they planned their lives around.
Case files
Massachusetts, then eight states
Steward Health Care
Cerberus bought a nonprofit Catholic system in 2010 and left, years later, with reported profits in the hundreds of millions. The firm’s defense is rescue: the hospitals were failing, and private capital kept them open. What the public record also shows is a 2016 sale of the real estate, a company famous for financial engineering, and a 2024 bankruptcy that revealed hundreds of care deficiencies across the system. A Brookings examination of inspection records described nearly 680 documented deficiencies at Steward hospitals, climbing sharply by 2024, when the per-hospital count ran far above the national average. Patients did not choose ‘a real-estate strategy.’ They chose the nearest ER. Some of those ERs did not stay open.
The public bill. Closed or sold hospitals, rent extracted from care budgets, and a CEO on a reported $40 million yacht while the Senate demanded answers.
Delaware County, Pennsylvania
Prospect, Leonard Green, and Crozer
Prospect Medical Holdings, backed by Leonard Green & Partners, became a national example because the sequence was so legible. Buy hospitals. Borrow. Pay investors. Sell the land. Charge the hospitals rent. When Pennsylvania’s attorney general sued, the complaint described mismanagement and broken commitments. More Perfect Union’s 2025 film stays with workers and patients at Crozer as the system fails and, after the 2025 bankruptcy, the county’s hospitals close. The people in the waiting room were not parties to the credit agreement. They are the ones rerouted in an emergency.
The public bill. A county loses its hospital. The rent and the dividend already happened.
What the public lost
Cost
- Rent and interest paid out of budgets that used to fund care
- Facility fees and staffing-company bills layered on the hospital charge
- Public money — Medicare, Medicaid, local subsidies — underwriting a financial structure pointed at investors
Access
- Closed community hospitals and ERs, with longer drives for emergencies and maternity
- Service lines cut before the whole campus fails
- A JAMA-measured rise in falls and line infections: the care is still ‘available,’ and worse
The owners’ argument
Sponsors argue they buy distressed hospitals that would have closed anyway, invest in them, and are blamed for trends — consolidation, labor shortages — that are industry-wide. Some of that is true: most U.S. hospital prices rose because of consolidation and weak price regulation, including at nonprofits. Private equity is a sharper version, not the only version. Debt plus a sale-leaseback plus a short clock is different from a nonprofit that still owns its campus. The closure numbers in the REIT study are hard to wave away.
Sources
- JAMAKannan, Bruch, and Song — hospital adverse events after private-equity acquisition (2023)
- The BMJREIT acquisition, hospital closure, and bankruptcy (2025)
- BrookingsLessons from the collapse of Steward Health Care
- More Perfect UnionWhy Private Equity Is Buying Hospitals & Shutting Them Down (2025)
- STATPrivate equity: health care’s vampire (2024)
- Office of Sen. Chris MurphyAided and Abetted — private equity in health care (2026)