When Private Equity Sees Hospitals as Land, Not Care

Sometimes private equity's presence doesn't just make healthcare worse. It makes it disappear.

Over the past decade, private equity (PE) has reshaped hospital ownership under the banner of rescue and reform. Today, 488 hospitals in the U.S. are owned by PE firms, representing 8.5% of all private hospitals and 22.6% of all proprietary for-profit hospitals. And there is growing concern that these acquisitions are more about real estate returns — land grabs, in essence — and less about delivering or improving healthcare.

A real estate model masked as healthcare strategy?

In PE hospital acquisitions, a common tactic is the sale-leaseback in which:

• A hospital's land and buildings are sold, often to a real estate investment trust (REIT), then leased back to the hospital.
• This generates quick cash for investors but leaves the hospital with ongoing rent burdens that exceed its financial resources and ability to support patient needs.
• While clinical services decline and operations falter, the valuable real estate remains and can be repurposed or sold.

There is ample evidence that these sale-leasebacks compromise patient care. A 2023 JAMA study found PE-owned hospitals experienced 25% more hospital-acquired complications even though procedural volume fell by 16%. In a 2023 BMJ review, hospital PE ownership was most consistently associated with higher patient and payer costs and with mixed or harmful impacts on quality. 

The greatest negative impact of PE ownership is care that not just worsens but disappears. Steward Health Care and now Crozer Health provide tragic, real-world examples.

Case study #1: Steward Health Care

Steward Health Care, once the nation's largest physician-owned hospital system, is a high-profile example of this pattern. A special report by the Private Equity Shareholder Project (PESP) summarized the details:

• In 2016, backed by Cerberus Capital Management, Steward sold its hospital real estate to Medical Properties Trust (MPT) for $1.2 billion and leased the buildings back — trading land for cash while incurring $350 million+ in annual rent obligations.
• By 2023, Steward was $6.6 billion in debt and had paid out $800 million in investor dividends — even as hospitals reported staff shortages, delayed maintenance, mold and pest issues, canceled procedures, and impaired patient safety.
• Steward filed for Chapter 11 bankruptcy in May 2024, closing nearly 30 hospitals, eliminating over 2,600 jobs, and disrupting access in underserved areas.

Now another health system has suffered PE's consequences . . .

Case study #2: Crozer Health

Crozer Health, a four-hospital system in Delaware County, Pennsylvania, was owned by Prospect Medical Holdings (backed by PE firm Leonard Green). After selling its real estate in 2019, Crozer was left with $35 million in annual rent payments. The system entered bankruptcy in early 2025; two hospitals closed, 2,600 jobs were lost, and more than 500,000 residents lost local hospital access.

Toward accountability: What reforms are possible?

In response to Crozer's collapse, the Pennsylvania legislature has proposed multiple reforms. A House bill would give the state's Attorney General the power to block any for-profit PE hospital acquisitions that are “against public interest.” The now-passed bill faces challenges in the Senate even as Governor Josh Shapiro has called PE “a cancer in our healthcare system.”

Pennsylvania's initiative offers a blueprint for PE reform, but broader actions are needed. These range from greater transparency in sale‑leaseback and REIT transactions to greater oversight of PE-owned-hospital quality outcomes.

These guardrails won't eliminate PE investment but might help ensure it serves healthcare —