America's Hospitals Were Sold to Wall Street. The Bankruptcies Are Just Getting Started.
Two decades of private equity dealmaking inside U.S. hospitals has produced bankrupt chains, billions in bondholder losses, and a healthcare REIT bleeding out in slow motion. The reckoning is only halfway through.
Saint Elizabeth's Medical Center in Brighton, Massachusetts is a teaching hospital with a 150-year history. In 2024, when Steward Health Care collapsed into the second-largest hospital bankruptcy in U.S. history, Saint Elizabeth's nearly went with it. Doctors paid for their own surgical supplies. Vendors stopped delivering food. A patient died after a life-saving embolization device was repossessed by the manufacturer because Steward had not paid the bill.
Two years later, the post-mortem is still being written. Massachusetts is suing Steward's founders. Pennsylvania is winding down Prospect Medical's bankrupt hospital network. Medical Properties Trust, the publicly traded REIT that financed the Steward empire, has cut its dividend twice, lost more than 80% of its peak market cap, and is selling assets to keep the lights on. Apollo, Cerberus, Leonard Green, and KKR have all spent the past eighteen months explaining to limited partners why the hospital chapter of their portfolios looks the way it does.
This is not a story about one bad deal. It is a story about a model — buy a hospital, sell its real estate, lever the operating company, extract dividends, exit — that worked beautifully for the people who designed it and is now blowing up on everyone left holding the paper.
How Wall Street Bought 30% of American Hospitals
Private equity's hospital playbook is now well-documented, even if Wall Street still seems surprised when it ends in bankruptcy. The mechanics are simple. A PE sponsor acquires a struggling hospital chain in a leveraged buyout. It then executes a sale-leaseback — selling the land and buildings to a real estate vehicle (often a REIT like Medical Properties Trust) and signing decades-long leases at above-market rents. The proceeds flow out as a dividend recap to the sponsor. The operating company is left thinly capitalized, paying punishing rent, and dependent on volume growth to service its debt.
By 2024, PE firms owned roughly 460 hospitals across the United States — about 8% of all private hospitals and closer to 22% of for-profits, according to research from the Private Equity Stakeholder Project. In specific markets — Rhode Island, parts of Texas, parts of Pennsylvania — PE ownership concentration exceeded one-third.
The model works as long as three things hold: patient volume keeps growing, labor costs stay manageable, and the REIT lessor stays solvent enough to negotiate when things wobble. In 2023–2024, none of those things held.
The Wreckage So Far
Steward Health Care — Cerberus Capital acquired the chain in 2010, executed a $1.25 billion sale-leaseback with MPW in 2016, took dividends, and exited in 2020 with founder Ralph de la Torre buying control. The chain filed for Chapter 11 in May 2024 with $9 billion in liabilities. Hospitals across eight states were sold, shuttered, or absorbed by state-backed receivers. Massachusetts seized two facilities. Vendors are still litigating unpaid invoices into 2026.
Prospect Medical Holdings — Leonard Green & Partners acquired the chain in 2010, took out roughly $645 million in dividends through the 2010s, then sold to management. Prospect filed Chapter 11 in January 2025. Hospitals in Connecticut, Pennsylvania, Rhode Island, and California are still being wound down or transferred.
Lifepoint Health — Apollo took Lifepoint private in 2018. The chain has not failed, but bond markets have repeatedly punished it as cost pressures hit margins. Apollo merged Lifepoint with Kindred Healthcare in 2021 to consolidate exposure and is now reportedly exploring strategic alternatives.
Quorum Health — KKR-controlled spin-off from Community Health Systems, bankrupt in 2020.
Hahnemann University Hospital — Closed in 2019 after PE owner Joel Freedman bought the Philadelphia hospital, attempted to monetize the real estate, and walked away when the operating economics failed.
The list goes on. The pattern does not change.
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