Kindred Hospital North Florida shifted to private ownership in 2021, following a multibillion-dollar acquisition of its parent company. While operations at the Green Cove Springs long-term acute care and rehabilitation facility appeared unchanged from the outside, the hospital had come under the control of a major Wall Street player.

The facility is now part of ScionHealth, a hospital network backed by Apollo Global Management — one of the largest private equity firms in the world. Apollo manages over $800 billion in assets and now oversees roughly 220 hospitals, giving it the biggest private-equity footprint in U.S. health care.

Private equity investment can sometimes stabilize hospitals facing financial crises. But in other cases, it can intensify existing challenges, especially at facilities already struggling with debt. ScionHealth did not respond to requests for comment on its operations.

As private equity’s influence grows, federal and state lawmakers are taking a closer look at what these deals mean for hospitals, patients, and local communities.

How Private Equity Buyouts Work

Private equity firms typically use substantial borrowing to take over companies, whether private or publicly traded. Their goal is to increase efficiency and sell the business later at a profit. In hospitals, that often translates to cost-cutting — particularly staffing expenses.

A 2021 study found that employment at PE-acquired hospitals dropped around 6% within four years of acquisition, with wage costs falling up to 9% after eight years. Administrative roles saw the biggest cuts, while frontline medical staff were largely protected. The report suggested that these changes improved short-term efficiency without harming quality of care.

But those improvements can only go so far.

Where Private Equity Helps — and Where It Doesn’t

Private investment can rescue hospitals on the brink, said Harold Miller of the Center for Healthcare Quality and Payment Reform. Still, many struggling facilities face challenges that capital alone can’t fix.

Rural hospitals are especially vulnerable. Nearly half were operating at a loss in early 2024, up from 43% the year before. Miller points to the rapid shift from traditional Medicare to Medicare Advantage as a major pressure point. Advantage plans tend to reimburse hospitals at lower rates and are known for denying or delaying claims — straining facilities that already operate with thin margins.

More than half of Medicare beneficiaries are now enrolled in these private plans, and the revenue squeeze has hit small, rural hospitals the hardest.

Joining a larger health system can boost a hospital’s negotiating power with insurers, but the financial structure of PE buyouts can create new burdens. The debt used to finance the acquisition often falls directly on the hospital, with the facility’s land, buildings, and revenue commitments serving as collateral.

Economist Eileen Appelbaum notes that while investors face little risk, the hospital assumes significant financial pressure — on top of the cost of paying management fees to the private equity firm.

A recent U.S. Senate Budget Committee report highlighted these concerns. One example: Prospect Medical Holdings, once owned by Leonard Green & Partners, paid the firm more than $13 million in fees and delivered $424 million in payouts before collapsing under the weight of its debt.

Mounting Regulatory Efforts

A string of hospital bankruptcies and allegations of predatory practices have prompted calls for stronger oversight. Policymakers argue that private equity’s profit-driven approach often conflicts with the mission of health care.

Some states are responding.
• California recently passed a law restricting PE and hedge-fund influence over clinical and financial decisions in hospitals.
• Massachusetts enacted broader disclosure rules for private equity deals after the high-profile failure of Steward Health Care.

Steward, acquired by Cerberus Capital Management in 2010, once operated more than 30 hospitals nationwide — including eight in Florida — but collapsed into bankruptcy in 2024 under more than $9 billion in liabilities. Several Steward hospitals have since closed, stretching nearby facilities and forcing local governments and nonprofits to spend tens of millions of dollars to maintain access to care.

Orlando Health purchased three of Steward’s Florida hospitals in late 2024. The remaining South Florida locations were handed back to their landlord, Medical Properties Trust, during the bankruptcy process.

A Community Impact With No Easy Answers

When a hospital is the sole provider in a region, residents may have little choice but to support bailouts if the facility fails. UF researcher Rui Guo, who studies private-equity ownership in hospitals, said highly leveraged buyouts pose real risks to community access.

Whether private equity ultimately helps or harms a hospital depends on the underlying financial health of the facility — and the structure of the deal.

“Using debt to acquire hospitals can save a struggling facility,” Guo said. “But it can also hasten its decline. The community can end up bearing the consequences.”

Source: WUFT