This story revolves around a number, and it’s important to say it slowly. Approximately $5 billion was invested in American healthcare by private equity firms in 2000. That amount was estimated to be $104 billion by 2024. Even though the majority of patients are unaware that the ownership of their local hospital is changing hands somewhere on a balance sheet they would never see, that kind of jump doesn’t happen by accident and it doesn’t happen quietly.
The mechanics are not as enigmatic as they seem. A fund purchases a hospital, primarily using borrowed funds, and then holds the hospital accountable for paying back the debt. Money that was previously used to replenish supply closets or pay nurses is redirected toward loan repayments. Occasionally, the company sells the real buildings and land and then leases them back to the hospital it recently purchased, forcing the organization to pay rent on property it previously owned. In terms of money, it’s a cunning ploy. It’s also the kind of thing that, when observed in hundreds of facilities, begins to feel less like strategy and more like extraction with improved documentation.
At least 386 hospitals, or about 30% of all for-profit hospitals in the nation, were owned by private equity by the beginning of 2024. Researchers can measure the pattern that follows acquisition because it is sufficiently consistent. A study published in Health Affairs examined 67 hospitals acquired by private equity and discovered a 2.7 percentage point increase in thirty-day postoperative mortality, primarily due to what surgeons refer to as “failure to rescue”—patients who experience complications and are not treated promptly. Emergency surgeries saw the biggest increase. There was no discernible change in planned operations. That makes sense in a grim way. A crisis cannot be planned, and people must be on hand.
The staffing cuts—which are rarely presented as cuts—come in at this point. They are presented as effective. There are fewer full-time clinicians, fewer nurses per bed, and smaller emergency rooms. It appears that investors think these are operational enhancements. They are typically described differently by the remaining clinicians, who see them as the gradual erosion of the margin that allows a hospital to absorb a bad night.
Consider Hahnemann, a 171-year-old hospital in Center City Philadelphia that mostly served poor and minority patients. After purchasing it in 2019, a private equity firm allegedly did not do much with it for eighteen months before closing it to sell the property for opulent apartments. The plan, according to Lauren McHugh, a registered nurse who had worked there for seventeen years, was always to buy it, let it fail, and shut it down. It’s difficult to ignore how well the results matched the incentives, regardless of whether that was the original intention.
And there’s Steward. In 2010, Cerberus Capital purchased a failing Catholic hospital system in Massachusetts, turned it into a for-profit business, changed its name, and used the $1.25 billion sale-leaseback to launch a nationwide purchasing binge. In 2020, Cerberus made about $800 million in profit. By 2024, Steward had filed for bankruptcy, and its CEO’s $40 million yacht was parked close to the Galapagos while patients in his emergency rooms passed out while awaiting treatment. There were two hospitals that never reopened. Low-income communities were served by both.
Whether Washington will take any action is still up in the air. In 2024, the FTC, Labor, and HHS jointly issued a request for information; HHS came to the conclusion that the harms warrant further investigation and analysis—a conclusion that can have a significant impact. Private funds don’t report what public companies are required to, which contributes to the industry’s continued opaqueness.
Observing all of this, the language is what remains. loading debt. stripping of assets. effectiveness. Words designed to make a hospital sound like a warehouse. Perhaps that was always the intention.
