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Private equity’s healthcare bankruptcies surging among high debt levels, high interest rates

New report highlights urgent concerns for distressed healthcare companies owned by private equity

April 17, 2024

In 2023, a surge in bankruptcies hit the healthcare sector, sending shockwaves through critical services across the nation. Today, the Private Equity Stakeholder Project (PESP) reveals alarming data in its latest report, “Private Equity Healthcare Bankruptcies are on the Rise.”

Key findings from the report underscore a troubling trend: at least 17 out of the 80 (21%) healthcare bankruptcies in 2023 were by private equity-owned companies. Notably, some of the most significant bankruptcies, such as Envision Healthcare (KKR), Air Methods (American Securities), and American Physician Partners (Brown Brothers Harriman Capital Partners), garnered major headlines, signaling a systemic issue demanding urgent attention.

Looking ahead, 2024 is poised to witness another wave of private equity-driven healthcare distress, restructuring, and bankruptcies, amplifying concerns for the stability of essential healthcare resources. The report warns that the vast majority of distressed healthcare companies are currently under private equity ownership, posing significant risks to both the industry and health infrastructure.

Why the observable surge? Private equity’s excessive reliance on debt and aggressive financial strategies are pinpointed as primary culprits, placing healthcare companies in precarious positions. The report delves into case studies, revealing the detrimental impact of private equity’s pursuit of growth and short-term gains, at the expense of companies, employees, patients, and communities.

Moreover, the research sheds light on the broader economic landscape exacerbating healthcare woes. High interest rates, labor costs, and regulatory shifts collectively compound the challenges faced by healthcare companies, particularly those burdened with high levels of debt under private equity ownership.

Such bankruptcies are not mere financial events; they threaten to disrupt critical healthcare services, burden healthcare providers, and strain publicly-funded healthcare infrastructure, including Medicare and Medicaid programs.

The report’s comprehensive analysis underscores the urgency for stakeholders to address the systemic risks posed by private equity in healthcare. With the number of private equity healthcare bankruptcies more than doubling in recent years, proactive measures are imperative to safeguard the stability and accessibility of healthcare services for all.

View the PESP research at:

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