PESP Private Equity Hospital Tracker

PESP has created the Private Equity Hospital Tracker

A current list of all private equity-owned hospitals in the U.S.

Key Points

• Approximately 460 US hospitals are owned by private equity firms. That represents:
  • 8% of all private hospitals
  • 22% of all proprietary for-profit hospitals
• At least 26% of private equity-owned hospitals serve rural populations.
• A handful of private equity firms dominate the list of private equity-owned hospitals: Apollo Global Management (Lifepoint Health, ScionHealth), Equity Group Investments (Ardent Health Services), One Equity Partners (Ernest Health), GoldenTree Asset Management and Davidson Kempner (Quorum Health), Surgery Partners (Bain Capital), and Webster Equity Partners (Oceans Healthcare).
• Texas has the most private equity-owned hospitals (97).
• New Mexico has the highest proportion of private equity-owned hospitals (38%).
• Nearly a quarter (22.5%) of private equity-owned facilities are psychiatric hospitals.
• This tracker was updated in January 2024. For notes on this update, see here.
• Jump to the PESP Private Equity Hospital Tracker
• Jump to the interactive map of PE-owned hospitals in the U.S.

Introduction
Private equity ownership of hospitals has drawn scrutiny in recent years as some private equity hospital acquisitions have produced troubling impacts for patients and workers across the country. We have seen private equity firms aggressively loot safety net hospitals, strip out valuable real estate, cut critical but less profitable services, and exploit government funding programs designed to support and stabilize healthcare access.

The consequences have been borne by healthcare workers and the communities they serve. Private equity’s hospital profiteering has resulted in dangerous conditions, closures and reduced access to services, declining quality, and fraud.

Despite the threat they pose to critical healthcare services, private equity firms are largely able to operate in the shadows. Limited regulation of hospital ownership, particularly of the predatory financial practices sometimes employed by private equity investors, makes accurate and up-to-date data on private equity in hospitals difficult to generate and maintain.

In recent years researchers have conducted a handful of essential studies analyzing both the extent of private equity hospital ownership and its impacts (see for example: Anaeze C. Offodile II et al., “Private Equity Investments in Health Care: An Overview of Hospital and Health System Leveraged Buyouts, 2003–17,” and Sneha Kannan et al., “Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition”). Overall, though, there is a dearth of research in the space. Particularly challenging is the ever-changing investment landscape; private equity firms typically own healthcare companies for just four to six years, buying and selling frequently enough that existing research loses relevance quickly.

In creating the Private Equity Hospital Tracker, we aim to provide an accurate, up-to-date, and accessible tool to pierce the veil of private equity hospital ownership.

See the hospital tracker here

Why Private Equity?
Private equity investment in healthcare has grown dramatically in recent years, reaching an all-time high in 2021 of 515 deals valuing $151 billion.[1] Healthcare is second only to IT as the most popular target for private equity investment.[2]

The growing presence of private equity in healthcare is concerning. The private equity business model, which is characterized by the pursuit of outsized profits over short periods of time and a reliance on high levels of debt, is in many ways incompatible with providing quality affordable healthcare.

Hospitals are some of the largest institutions impacting patients, communities, and workers that have been targeted by private equity. For example, Bain Capital’s $33 billion takeover of HCA Healthcare in 2006 was at the time the largest leveraged buyout in private equity history.[3] Today, some of the biggest hospital chains in the country are private equity-owned, including LifePoint Health (Apollo Global Management) and Ardent Health Services (Equity Group Investments).[4]

Private equity firms often seek to double or triple their investment over 4-7 years. The pursuit of these outsized return expectations over relatively short time horizons can lead to cost-cutting that hurts care. In addition, use of high levels of debt can divert cash from operations to interest payments and dividends paid out to private equity owners.

Below are some financial tactics characteristic of private equity investment:

• High leverage: Private equity firms often utilize significant amounts of debt then buying companies. Firms typically buy companies through leveraged buyouts, whereby a private equity firm finances a substantial portion of an acquisition by taking out a loan secured by the company it is buying. High leverage can divert cash away from operations to paying interest on debt and leave companies more at risk for restructuring or bankruptcy.
• Sale-leaseback of real estate: Private equity firms that own hospitals sometimes conduct sale-leaseback transactions, where the firm will sell the hospital’s real estate to a third party and lease it back. While these transactions provide a quick way to monetize real estate and generate cash, they can leave hospitals with fewer assets and higher monthly lease payments.[5]
• Debt-Funded Dividends: Some private equity firms siphon money out of companies they own through dividend recapitalizations, where a private equity firm directs its portfolio company to take on new debt and use the proceeds to pay the private equity owner a cash payout. These transactions can unnecessarily load healthcare providers with debt. While the private equity firm in these situations makes money, the healthcare provider often does not receive proceeds from the loan and still must pay it back, leaving it more vulnerable to market conditions and with fewer resources to support operations as it pays its monthly debt service payments.[6]
• Roll-ups: Private equity companies often conduct “roll-ups” by buying up multiple companies in the same industry segment and merging them under the same corporate umbrella. These transactions can allow firms to take advantage of economies of scale. However, a wide body of research has shown that provider consolidation leads to higher healthcare prices for private insurance and public healthcare programs like Medicare.[7]
• Fees: Private equity firms often charge management or advisory fees to the companies they own, which can cost companies millions of dollars each year. Fees are typically stipulated in a Management Services Agreement between the private equity firm and a company that it controls. In some cases, companies must pay fees to the private equity firm even for services never rendered (“accelerated monitoring fees”). These fees can further drain a company’s cash away from hospital operations into the pockets of investors.[8]

Key Findings
We tracked 457 hospitals owned or operated by private equity firms. That represents approximately 8% of all private (non-government-owned or operated) hospitals (5485 facilities total).

For context, most community hospitals (58%) in the US are non-profits.[9] Of the country’s proprietary for-profit hospitals, private equity-owned facilities represent approximately 22% of hospitals (of 1,870 facilities total).

Hospital Systems and Private Equity Firms
We identified dozens of different private equity firms that own or operate hospitals; however, a small number of firms own most of them.

By far the largest private equity owner and operator of hospitals is Apollo Global Management. We tracked at least 224 hospitals through Apollo’s two health systems Lifepoint Health and ScionHealth.

The two companies are the result of a series of hospital acquisitions by Apollo, which in 2018 bought Lifepoint and merged it with another hospital chain, RegionalCare Hospital Partners.[10] Then in December 2021 Lifepoint acquired large acute care hospital chain Kindred Healthcare. As part of the transaction, Lifepoint shifted some of the acquired facilities and some of its existing hospitals into a new company called ScionHealth, which is also controlled by Apollo.[11]

See our report on Lifepoint Health:  “Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers” (January 2024)

Equity Group Investments owns 32 hospitals throughout Texas, Oklahoma, Idaho, Kansas, New Mexico, and New Jersey through its hospital system Ardent Health Services.[12]

Read more about Ardent Health Services in our report on rural healthcare: “Private Equity Descends on Rural Healthcare” (February 2023)

One Equity Partners owns Ernest Health, which operates at 31 acute rehab and long-term acute care facilities in 11 states: Arizona, California, Colorado, Idaho, Indiana, Montana, New Mexico, Ohio, South Carolina, Texas, Utah, and Wyoming.[13]

GoldenTree Asset Management and Davidson Kempner together own Quorum Health, which they acquired after it filed for bankruptcy in 2020.[14] As of September 30, 2022, Quorum operated 21 hospitals in rural and mid-sized markets in 13 states. Due to its lender credit agreement related to the bankruptcy, Quorum is actively selling hospitals to generate cash to meet its financial obligations.[15]

Bain Capital is the largest owner of Surgery Partners, which operates approximately 145[16] surgical facilities in 32 states. Although Surgery Partners is currently publicly traded, Bain Capital continued to be the largest investor with a 40% stake as of September 30, 2023.  In a December 2023 filing with the SEC, Surgery Partners noted that “Although we are not a ‘controlled company’ within the meaning of the corporate governance standards of Nasdaq, Bain Capital will continue to be able to strongly influence or effectively control our decisions.”[17]

The top owner of psychiatric hospitals is Webster Equity Partners, which owns hospital chain Oceans Healthcare.[18]

* This number includes Surgery Partners’ hospital locations. It differs greatly from the total number of Surgical Partners facilities (approximately 145) because our tracker does not include ambulatory surgery centers or other outpatient locations.

Note: The numbers reflected in our tracker are an approximation. In many cases they differ from what hospital systems or private equity firms report. These differences may be the result of recent transactions, inaccuracies in CMS source data, and/or limited publicly available information on facility ownership.

Mapping Private Equity Hospital Ownership
The state with the most PE-owned hospitals is Texas, with 97 facilities. This represents 18% of the state’s private hospitals.

While New Mexico has fewer private equity-owned hospitals (17 facilities), the state has the highest proportion of private equity-backed hospitals compared to all private non-government hospitals at 38%.

In Wyoming, three of the state’s 8 private hospitals are private equity-owned, representing 38% of private hospitals. However, 21 of Wyoming’s 29 hospitals are government-owned.

At least 122 (27%) of the private equity-owned facilities serve rural populations. Private equity firms have a growing presence in rural healthcare services.

See our report on private equity’s growing influence in rural healthcare: “Private Equity Descends on Rural Healthcare” (February 2022)

Types of Hospitals
Non-specialty acute care hospitals were the most common type of private equity-owned hospital at 160 (35.0%) facilities. The second most common were rehabilitation hospitals, at 117 (25.6%) facilities, followed closely by psychiatric facilities at 103 (22.5%) facilities. Long term acute care facilities (LTACH) were the least common, at 76 facilities (16.6%).

The high volume of psychiatric hospitals reflects private equity’s broader interest in behavioral health, which has been a top investment target for private equity investment.

See our reports on private equity investments in behavioral health:

“The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth” (February 2022)

“Understaffed, Unlicensed, and Untrained: Behavioral Health Under Private Equity” (September 2020)

Quality Ratings
CMS assigns an overall star rating between 1 and 5 for hospitals that summarizes quality information collected by CMS, including mortality, safety, readmission, patient experience, and timely and effective care. According to CMS, “The overall rating shows how well each hospital performed on an identified set of quality measures compared to other hospitals in the U.S. The more stars, the better a hospital performed on the available quality measures.”

Just 111 (24%) of the 457 hospitals we tracked had CMS star ratings available, which we believe to be an insufficient amount of data to glean trends in private equity ownership. However, the distribution of ratings is shown below for reference alongside the national average.[19]

Of the 111 facilities with star ratings available, private equity-backed facilities lagged behind national averages with a greater proportion of 1-, 2-, and 3-star facilities and a lower proportion of 4- and 5-star than the national average. For example, 2-star facilities represented 32.4% of private equity-backed facilities compared to the 21.7% national average and 1- star facilities represented 12.6% of PE-backed facilities compared to the 8.1% national average. Meanwhile, 5 star-facilities represented just 5.4% for private equity compared to the 15.7% national average.[20]

Research Methods
Our list is based on Center for Medicare and Medicaid Services’ (CMS) lists of all Medicare-enrolled hospitals, including acute care hospitals and specialty hospitals (long-term acute care, rehabilitation, children’s, psychiatric, and religious hospitals).[21]

We identified hospitals that are private-equity-owned through a combination news searches and the data provider Pitchbook, which tracks private equity firms and deals. We also consulted the CMS database “Hospital All Owners Information,” which provides ownership information self-reported by facilities.[22] This data was in most cases insufficient on its own to trace private equity ownership but provided helpful clues.

It is likely that there are hospitals that we failed to identify – private equity firms are generally not required to disclose acquisitions, so many deals are not publicly disclosed. Our list provides an approximation based on the best available data.

What counts as Private Equity?
We include traditional private equity buyouts as well as growth/expansion capital investments. We also include hospitals that are operated by PE firms through more complex ownership structures, such as joint ventures with non-profits or academic health systems.

We do not include venture capital (VC) investments in our count of private equity-owned facilities, but we have indicated where we have seen VC investments in our list.

Rural vs Urban
As a basis for data on rurality, we used data from the Cecil G. Sheps Center for Health Services Research on rural hospitals in the US.[23]

We calculated rurality based the following factors:

• Rural status based on the definition used by the Federal Office of Rural Health Policy (FORHP) and the hospitals’ payment designation with CMS (provided by the Sheps Center).
• CMS rural payment designations: sole community hospital (SCH), Medicare-dependent hospital (MDH), rural referral center (RRC), and critical access hospital (CAH).

Notes on the January 2024 Update
This data was last updated in January 2024. Here is a summary of the most significant changes:

• The data on rehabilitation hospitals we used in the original version of this tracker was incomplete. This version added almost 900 rehabilitation hospitals that were not originally reflected. 67 of those additions are PE-owned.
• The update reflects corrections to facilities that were incorrectly labeled as not PE-backed. The most significant additions were 20 new Lifepoint Health facilities and 15 new ScionHealth facilities.
• A handful of hospitals were removed as PE-owned due to sales, including 6 facilities previously owned by Quorum Health and one facility owned Pipeline Health.

Related Research
A 2021 study published in Health Affairs looked at private equity acquisitions of short-term acute care hospitals between 2003–17. The study identified a total of 42 private equity acquisitions involving 282 unique hospitals for the period. [24]

The Health Affairs study had one notable outlier: 57% of the total hospital acquisitions (161 hospitals) were the result of Bain Capital and KKR’s 2006 acquisition of HCA,[25] one of the largest hospital buyouts in history. HCA went public in 2010, so those hospitals are not included in our tracker.[26]

Another 2021 study published in the Annals of Internal Medicine identified 130 hospitals under private equity control in 2018. Most hospitals identified in the study were in the South, considered rural and in zip codes with a lower median household income. The study also found fewer full-time–equivalent employees per occupied bed and lower average patient experience scores among private equity-owned hospitals, though the researchers note that these measures “do not fully capture quality of care” and that “additional research is necessary to identify and characterize the mechanisms underlying these differences.”[27]

In December 2023, a study published in the Journal of the American Medical Association (JAMA) found that rates of hospital-acquired complications for patients increased by 25% at hospitals after they were purchased by private equity firms. The increase was driven by a 27% increase in falls, which tend to happen on the general floors of the hospital; a 38% increase in central line infections, which are associated with ICU care; and a doubling of the rates of surgical site infections. The study drew from Medicare Part A claims data for hospital stays between 2009 and 2019 at 51 private equity-acquired hospitals compared against 259 matched control hospitals (non-PE-owned).[28]

Next Steps
Hospital Management Companies
Some non-profit or publicly owned hospitals are operated by private-equity-owned management companies. Many of these management relationships are not publicly disclosed, so it is difficult to know the extent to which private equity firms manage public and non-profit facilities.

One such company is Ovation Health (formerly QHR Health), owned by private equity firm Grant Avenue Capital since 2021, which focuses on independent and rural hospitals.[29] On its website, Ovation calls itself the “The premier provider of shared services to independent hospitals, health systems, and their leadership across the nation.” It currently has over 375 hospital management clients across 47 states.[30]

Hospitals that are managed by private equity-owned companies like Ovation are not yet captured in our tracker, but we intend to include these facilities when more data becomes available.

Tracking Sale-Leasebacks
Many private equity-backed hospitals have gone through sale-leaseback transactions, selling their underlying real estate to a third party, typically a REIT, and leasing it back. We have begun tracking hospitals that have executed sale-leaseback transactions, and have included preliminary data in the tracker. We intend to build upon this data in future updates to the tracker.

See Our Other Work on PE-Owned Hospitals

Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers (January 2024)

How private equity raided safety net hospitals: Pipeline Health (July 2023)

Private Equity Descends on Rural Healthcare (February 2023)

How Private Equity Raided Safety Net Hospitals and Left Communities Holding the Bag (November 2022)

Steward Health Care Reaches $4.7 Million Settlement to Resolve Allegations of False Claims Act Violations (June 2022)

Apollo Global Management Completes Merger of Kindred Healthcare and LifePoint Health, Shifts Some Hospitals to New Company (January 2022)

Private Equity Firms Reap Payouts After Hospital Chain Received $1.6 Billion in CARES Act Support (September 2021)

[1] “Healthcare Private Equity Market 2021: The Year in Review” (Bain & Company, March 16, 2022), bain.com/insights/year-in-review-global-healthcare-private-equity-and-ma-report-2022/.

[2]https://www.bain.com/globalassets/noindex/2023/bain_report_global-private-equity-report-2023.pdf pg. 27.

[3] Kevin Dowd, “This Day in Buyout History: KKR, Bain Capital Complete the Biggest LBO Ever | PitchBook,” Pitchbook News, November 17, 2017, https://pitchbook.com/news/articles/this-day-in-buyout-history-kkr-bain-capital-complete-the-biggest-lbo-ever.

[4] Anna Falvey, “100 of the Largest Hospitals and Health Systems in America | 2023,” Becker’s Hospital Review, February 28, 2023, https://www.beckershospitalreview.com/lists/100-of-the-largest-hospitals-and-health-systems-in-america-2023.html.

[5] Brian Spegele, “How a Small Alabama Company Fueled Private Equity’s Push Into Hospitals,” Wall Street Journal, February 14, 2022, sec. Markets, https://www.wsj.com/articles/hospitals-private-equity-reit-mpt-steward-11644849598.

[6] Eileen O’Grady, “Dividend Recapitalizations in Health Care: How Private Equity Raids Critical Health Care Infrastructure for Short Term Profit” (Private Equity Stakeholder Project, October 2020), https://pestakeholder.org/reports/dividend-recapitalizations-in-health-care-how-private-equity-raids-critical-health-care-infrastructure-for-short-term-profit/.

[7] Karyn Schwartz et al., “What We Know About Provider Consolidation,” KFF (blog), September 2, 2020, https://www.kff.org/health-costs/issue-brief/what-we-know-about-provider-consolidation/.

[8] Eileen Appelbaum and Rosemary Batt, “Fees, Fees and More Fees: How Private Equity Abuses Its Limited Partners and U.S. Taxpayers” (Center for Economic and Policy Research), accessed March 24, 2023, https://www.cepr.net/report/private-equity-fees-2016-05/.

[9] “Fast Facts on U.S. Hospitals, 2022 | AHA,” American Hospital Association, accessed March 23, 2023, https://www.aha.org/statistics/fast-facts-us-hospitals.

[10]https://www.wsj.com/articles/lifepoint-health-agrees-to-apollo-buyout-1532347207?mod=article_inline

[11] “LifePoint Health Completes Kindred Healthcare Transaction,” December 23, 2021, https://lifepointhealth.net/news/2021/12/23/lifepoint-health-completes-kindred-healthcare-transaction.

[12] “Ventas and Equity Group Investments Announce Completion of Ardent Transactions,” press release, Ventas and Equity Group Investments, August 4, 2015. https://www.businesswire.com/news/home/20150804006878/en/Ventas-Equity-Group-Investments-Announce-Completion-Ardent ; Ardent Health Services website, accessed January 2024. https://ardenthealth.com/systems.

[13] “Portfolio,” One Equity Partners, accessed March 1, 2023, https://www.oneequity.com/portfolio ; Ernest Health website, accessed January 2024. https://ernesthealth.com/our-hospitals/.

[14] Case M.9845 – DAVIDSON KEMPNER CAPITAL MANAGEMENT / GOLDEN TREE ASSET MANAGEMENT / QUORUM HEALTH CORPORATION, No. 32020M9845 (European Commission, Directorate-General for Competition May 28, 2020). https://ec.europa.eu/competition/mergers/cases/decisions/m9845_112_3.pdf

[15] “Moodys Downgrades Quorum Health Corporations CFR to Ca; Outlook Negative,” Moodys Investor Service, January 30, 2023, https://www.moodys.com/research/Moodys-downgrades-Quorum-Health-Corporations-CFR-to-Ca-outlook-negative–PR_473331#:~:text=The%20outlook%20is%20negative.,in%20the%20next%20few%20quarters.

[16] While Surgical Partners operates approximately surgical locations, only a fraction of these appear in our hospital tracker. This is because the tracker only includes CMS-designated hospitals, and would not reflect ambulatory surgery centers, physicians’ practices, or other outpatient locations.

[17] Surgery Partners prospectus supplement filed with the Securities and Exchange Commission dated December 14, 2023. https://www.sec.gov/Archives/edgar/data/1638833/000110465923126902/tm2332214-9_424b7.htm#sATPS. Pg. S-3.

[18] “Oceans Healthcare Secures New Capital Partner, Eyes Accelerated Growth,” Oceans Healthcare (blog), February 1, 2022, https://oceanshealthcare.com/ohc-news/oceans-healthcare-secures-new-capital-partner/.

[19] “National distribution of the Overall Hospital Quality Star Rating,” Overall hospital quality star rating, Centers for Medicare and Medicaid Services. Based on July 2023 results. Accessed January 2024. https://data.cms.gov/provider-data/topics/hospitals/overall-hospital-quality-star-rating/

[20] National averages are drawn from CMS data as of July 2023. We subtracted hospitals for which there are no ratings available. Percentages are based on all rated hospitals.

[21] See the CMS Hospital General Information dataset: https://data.cms.gov/provider-data/dataset/xubh-q36u.  See the CMS Long-Term Care Hospital – General Information: https://data.cms.gov/provider-data/dataset/azum-44iv . See CMS Inpatient Rehabilitation Facility – General Information: https://data.cms.gov/provider-data/dataset/7t8x-u3ir. All accessed January 2024.

[22] Centers for Medicare and Medicaid Services, “Hospital All Owners Information,” CMS database, accessed February 2023. https://data.cms.gov/provider-characteristics/hospitals-and-other-facilities/hospital-all-owners.

[23] UNC Sheps Center List of Hospitals in the U.S. (2022 dataset). https://www.shepscenter.unc.edu/programs-projects/rural-health/list-of-hospitals-in-the-u-s/.

[24] Anaeze C. Offodile II et al., “Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003–17,” Health Affairs 40, no. 5 (May 1, 2021): 719–26, https://doi.org/10.1377/hlthaff.2020.01535.

[25] Anaeze C. Offodile II et al., “Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003–17,” Health Affairs 40, no. 5 (May 1, 2021): 719–26, https://doi.org/10.1377/hlthaff.2020.01535.

[26] “KKR, Bain’s HCA Files for up to $4.6 Billion IPO,” Reuters, May 7, 2010, sec. Business News, https://www.reuters.com/article/uk-hca-idUKTRE6464I420100507.

[27] Joseph Bruch, Dan Zeltzer, and Zirui Song, “Characteristics of Private Equity–Owned Hospitals in 2018,” Annals of Internal Medicine 174, no. 2 (February 2021): 277–79, https://doi.org/10.7326/M20-1361.

[28] Kannan S, Bruch JD, Song Z. Changes in Hospital Adverse Events and Patient Outcomes Associated With Private Equity Acquisition. JAMA. 2023;330(24):2365–2375. doi:10.1001/jama.2023.23147. https://jamanetwork.com/journals/jama/article-abstract/2813379

[29] QHR Health Becomes Independent Company Through Acquisition by Grant Avenue Capital,” QHR Health, June 1, 2021, https://www.prnewswire.com/news-releases/qhr-health-becomes-independent-company-through-acquisition-by-grant-avenue-capital-301303045.html

[30] Ovation Healthcare website, https://ovationhc.com/why-ovation-healthcare/. Accessed January 2024.