*In 2024, as Steward Health Care teetered on the brink of collapse, patients at its hospitals faced understaffed ERs, unsanitary conditions, and growing uncertainty about whether their local hospitals would even stay open. Meanwhile, CEO Ralph de la Torre enjoyed the spoils of lavish wealth, culminating in a $40 million yacht. Steward’s meltdown didn’t just endanger patient care in states from Massachusetts to Florida—it also pulled back the curtain on an alarming trend: the increasing grip of private equity on America’s healthcare system.

A Rapidly Growing Footprint

Over the last two decades, private equity firms—once associated primarily with manufacturing, retail, and real estate—have steadily encroached upon healthcare. The numbers tell the story:

• Nearly 460 U.S. hospitals are owned by private equity firms, accounting for 8% of all private hospitals and 22% of all proprietary for-profit hospitals.
• Roughly 26% of these private equity-owned hospitals serve rural communities, where closures or service reductions can be devastating to local residents.
• In 2021, 5,779 physician practices (spanning primary care, oncology, dermatology, and more) were owned by private equity, up from just 816 in 2012.

This surge in private equity ownership is no accident. Healthcare is a $5 trillion industry, offering consistent cash flow. Private equity sees an opportunity for outsized returns—often seeking to double or triple their initial investment in a short timeframe. Yet as Steward’s downfall illustrates, a quick-profit mentality can leave patients, clinicians, and entire communities holding the bag.

Steward Health Care: An Object Lesson

Steward began as Caritas Christi, a nonprofit hospital system serving mostly lower-income communities in eastern Massachusetts. In 2010, it was purchased by Cerberus Capital Management, converted to for-profit status, and rebranded as Steward Health Care. Although the private equity infusion initially kept the struggling system afloat, years of precarious finances led Steward to enter a high-stakes sale-leaseback agreement with Medical Properties Trust (MPT). The infusion of $1.25 billion allowed Steward to expand to more than 30 hospitals nationwide, but also saddled it with hefty rent payments.

Ultimately, patient care deteriorated. Staffing cuts and mounting debt undermined day-to-day operations. By 2024, Steward was $50 million behind on rent to MPT and filed for bankruptcy. Its CEO had walked away with hundreds of millions, leaving entire communities—like those served by Carney Hospital in Boston and Nashoba Valley Medical Center in central Massachusetts—scrambling for care. The fiasco was not an outlier; it was a warning sign of what can happen when private equity prioritizes profits over patients.

How Private Equity Reshapes Care—For the Worse

1. Cost Increases
   Private equity firms often seek rapid returns by raising prices. Studies show that private equity-owned hospitals and physician practices tend to charge more for services, pass on higher costs to patients, and aggressively bill insurers. In rural areas, where patients have few alternatives, these price hikes can be especially harmful.
2. Declining Quality and Safety
   Short-term profit pressures typically lead to cost-cutting measures—fewer nurses, overworked physicians, and scaled-back investments in facility maintenance. A 2023 study found that hospital-acquired complications rose by 25% at private equity-owned hospitals. Surgical site infections and bloodstream infections spiked, reflecting a decline in basic safety practices that can’t be addressed by simply “running lean.”
3. Consolidation and Reduced Competition
   Private equity “roll-up” strategies involve acquiring multiple smaller practices or hospitals and merging them into larger networks. While consolidation can theoretically lead to efficiencies, it often reduces patient choice, leads to monopolistic pricing, and can stifle competition in markets that already struggle with limited healthcare options.
4. Neglect of Essential Services
   Firms frequently target high-margin specialties (like cardiology or orthopedics) and cut back on primary care or mental health services that are less profitable. Over time, communities can lose critical resources like maternity wards, trauma centers, or behavioral health programs.
5. Short-Term Focus, Long-Term Harm
   Most private equity investments operate on a 3-7 year exit plan, prioritizing immediate gains over sustainable growth. This short horizon encourages decisions that can be devastating for the long-term health of a hospital, such as underinvesting in new technology or deferring maintenance to improve quarterly returns.

A New Study on Private Equity’s Impact

A new study published in JAMA by Kannan et al. provides further evidence that PE ownership is not just a financial risk—it’s a clinical risk, too. In the Kannan et al. study, researchers examined 51 PE-acquired hospitals compared with 259 control hospitals across the U.S. using 100% Medicare Part A claims from 2009 to 2019. They found that, after private equity acquisition:

1. Hospital-Acquired Adverse Events
   • Increased by 25% overall.
   • Falls rose by 27%, while central line–associated bloodstream infections jumped by 38%.
   • Surgical site infections doubled at PE-owned hospitals—particularly alarming given these hospitals actually performed fewer surgeries post-acquisition.
2. Patient Mix & Mortality
   • Patients admitted to PE-owned hospitals were slightly younger and less likely to be dually eligible for Medicare and Medicaid, suggesting a shift toward a lower-risk pool.
   • In-hospital mortality dropped marginally (by about 0.2 percentage points), but this difference disappeared by 30 days after discharge. Meanwhile, the study suggests increased patient transfers to other facilities, potentially offloading risk.
3. Underlying Drivers
   • The authors point to staffing cuts and other cost-reduction strategies as key contributors to these adverse events. PE firms often operate on a 3–7 year investment horizon, seeking quick.

Why Does This Matter?

1. Quality of Care Suffers
   When firms slash operational costs—often in the form of reduced nursing staff or deferred maintenance—hospital-acquired conditions can skyrocket. The new study quantifies exactly how much more dangerous care can become.
2. Disparities Deepen
   PE ownership disproportionately affects rural and low-income communities, which already face limited healthcare options. As closures like Carney Hospital in Boston and Nashoba Valley Medical Center in Massachusetts show, losing local access can be devastating for vulnerable patients.
3. Patient Outcomes & Public Trust
   While a small dip in in-hospital mortality might look like an improvement, the overall increase in hospital-acquired infections and complications—along with higher rates of patient transfers—suggests that short-term gains can mask long-term harm.

Charting a Path Forward

1. Regulatory Scrutiny
   Federal and state policymakers are taking note. Proposed legislation (e.g., the Corporate Crimes Against Health Care Act, the Health Over Wealth Act) aims to increase transparency, penalize harmful closures, and potentially limit how much debt can be placed on acquired hospitals.
2. Physician & Community Advocacy
   Doctors are organizing—some pushing for corporate practice of medicine laws that protect clinician autonomy. Communities are protesting hospital closures and demanding accountability when local facilities are shuttered for profit.
3. Deeper Health Policy Reforms
   Experts argue that addressing PE’s negative impact requires bigger-picture changes:
   • Adjusting Medicare/Medicaid reimbursements to keep safety-net hospitals afloat.
   • Strengthening antitrust oversight to prevent monopolistic roll-ups.
   • Investing in primary care and public health to reduce reliance on for-profit entities.

A Warning We Can’t Ignore

The Kannan et al. study offers empirical weight to the growing body of evidence that private equity ownership is compromising healthcare quality. The Steward Health Care fiasco was not a one-off; it was a preview of what happens when short-term profits supersede patient-centered care. From soaring infection rates to rural hospital closures, the cost of private equity in healthcare is measured not just in dollars but in lives and community well-being.

As a healthcare futurist and physician, I’ve seen how technological innovation and smart policy can improve patient outcomes. Yet all the AI tools in the world won’t fix a system that’s fundamentally undermined by misaligned incentives. It’s time for policymakers, health leaders, and communities to confront the reality that healthcare cannot be treated like any other commodity. The new data from Kannan et al. should serve as a clarion call: When profit motives eclipse patient safety, we risk losing the very soul of our healthcare system.