News: Private equity healthcare bankruptcies on the rise, report says

Of all healthcare bankruptcies in 2023, 21% of those companies were backed by private equity firms, according to a new report from the Private Equity Stakeholder Project (PESP). Trends showed that the number of private equity healthcare bankruptcies has increased substantially in recent years, with a 112.5% increase in 2019, HealthLeaders reported.

The nonprofit investigation reported that in 2023, 17 instances of private equity-owned organizations filed for bankruptcy, accounting for 21% of all healthcare bankruptcies, which more than doubled the eight that went bankrupt in 2019 and surpassed the number from the past three years combined, a total of 13. The report also stated that more bankruptcies are expected this year, due to many companies dealing with leverage and credit rating downgrades.

“We have to decide, do we want free market? Do we not want free market? And then if we want free market, do we want to put some guardrails in place to ensure that you don't have some of these adverse outcomes?” Matt Heywood, president and CEO of Aspirus Health, told HealthLeaders. “That's something our country hasn't really had to grapple with historically, but we're going to need to as more for-profits, more hedge funds, and private equity get involved in healthcare in general and this environment is getting tougher. We're going to have to address how much are we willing to allow to not go well before America decides it wants to put some guardrails.”

Editor’s note: To read HealthLeaders’ coverage of this story, click here. To read the PESP report, click here.