Private equity invested $1 trillion in healthcare in 10 years: Report
Private equity firms have become a major force in healthcare, investing more than $1 trillion over the last ten years, according to a recent report from New York University’s Stern Center for Business and Human Rights.
The report, published March 10 and authored by Michael Goldhaber, examines how private equity’s investments have impacted patient care, hospital finances and medical access.
“There is a healthcare crisis in the United States. Costs are rising, driven by market consolidation, increased insurance premiums, escalating drug prices and other changes,” the report said. “Many hospitals and healthcare facilities are experiencing staffing shortages. These and other factors mean that the poorest people in the U.S. have worse health outcomes than those in other high-income countries, despite the high level of spending.”
Here are four things to know:
1. The PE investments cover a wide range of sectors, including hospitals, behavioral health providers, nursing homes, ambulance services and medical staffing companies.
A study of leveraged buyouts cited in the report found PE-owned healthcare companies averaged debt-to-cash flow ratios of 7.1 — more than double that of public healthcare companies and also above the 4.0 threshold considered to be high by finance regulators. On the plus side, the report said, PE firms can improve operational efficiency and strategic guidance through capital and strategic expertise.
“In the context of healthcare, some of these firms have adopted responsible practices, suggesting that industry-wide reform is possible,” the report said.
2. Several academic studies found that PE acquisitions can lead to operational changes in healthcare organizations.
For example, Eileen Appelbaum of the Center for Economic and Policy Research found that PE investors are more likely to have a positive impact in smaller deals, using limited debt to acquire and revitalize struggling companies. However, larger deals, which can attract the most capital, can entail PE firms adding significant debt to healthcare institutions, which can weaken their financial stability and stymie operations.
Other studies cited in the report found that PE ownership can raise hospital complications by 25% and reduce hospital staff by 11.6%. One study also found nursing homes under PE ownership had 11% higher patient mortality rates.
3. In 2023, PE healthcare businesses saw 34 bankruptcies, which can “sometimes leave entire communities without adequate medical care,” the report said. It pointed to multiple hospital chains that have sought bankruptcy protection in recent years following PE ownership, including: Dallas-based Steward Healthcare, which sought Chapter 11 protection in May 2024; Los Angeles-based Prospect Medical Holdings, which sought Chapter 11 protection in January 2025; and El Segundo, Calif.-based Pipeline Health, which sought Chapter 11 protection in October 2022 but exited bankruptcy in early 2023.
4. Rather than eliminating PE investment in healthcare, the report called for reforms to improve accountability and protect patient care.
Recommendations include increased transparency around healthcare firm finances, ownership, and care quality; avoiding risky financial practices like sale-leasebacks, excessive debt or debt-funded dividends; keeping debt levels at sustainable ratios; and protecting patient care by avoiding service cuts, facility closures or staff and wage reductions except in “exigent circumstances.” The report also suggested stronger government oversight of healthcare acquisitions and public financial disclosures from PE firms as responsible investment policies.
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