Private Equity Healthcare Bankruptcies Are on the Rise

The report finds that private equity-owned companies accounted for approximately 21% of all healthcare bankruptcies in 2023, with a further wave expected in 2024. It attributes this trend to the private equity business model's reliance on excessive leverage, dividend recapitalizations, and aggressive growth strategies, which leave companies vulnerable to rising interest rates and labor costs. Case studies of firms like Envision Healthcare and Air Methods highlight how the No Surprises Act further impacted companies reliant on surprise billing. The report warns that these financial failures lead to service closures, layoffs, and threats to publicly-funded healthcare infrastructure.

• In 2023, private equity-backed companies represented a significant portion of healthcare bankruptcies, with at least 17 of the estimated 80 total healthcare bankruptcies (approximately 21%) owned by private equity firms. This represents a 112.5% increase in private equity healthcare bankruptcies compared to 2019, when there were 8.
• A high probability of further defaults is projected for 2024. As of November 2023, 93% of the most distressed healthcare companies in North America—all but three out of 45 companies rated B3 negative or lower by Moody’s Investors Service—were owned by private equity firms.
• The high rate of distress is driven by private equity's use of excessive leverage. While publicly traded healthcare companies average debt-to-EBITDA ratios around 3x, leveraged buyouts reached a 15-year high of 7.1x earnings in 2022. Many distressed companies have 'very high' (above 7x) or 'excessive' (8 or 9x) leverage.
• Private equity firms employ 'dividend recapitalizations,' where new debt is added to a portfolio company's balance sheet to pay dividends to the PE firm and its investors. An example is InTandem Capital Partners, which added debt to Cano Health to finance a $100 million dividend before the company went public and subsequently filed for bankruptcy in February 2024.
• The No Surprises Act, which bans most forms of surprise medical billing, has contributed to the financial distress of large PE-owned firms that relied on out-of-network billing. Air Methods, Envision Healthcare, and American Physician Partners all cited the Act as a factor in their 2023 bankruptcies.
• Bankruptcies in the PE-owned healthcare sector have tangible negative impacts on care and employment. For example, the Center for Autism and Related Disorders (CARD), owned by Blackstone, closed 50 locations following its acquisition and another 92 locations since January 2022, leaving some families with less than six weeks to find alternative providers.
• Some PE-owned companies use 'distressed exchanges' to defer bankruptcy by offering creditors assets worth less than original loans. Examples include US Renal Care (owned by Bain Capital and Summit Partners), Elara Caring (owned by Blue Wolf Capital Partners and Kelso & Company), and LifeScan Corporation (owned by Platinum Equity).

APA

Private Equity Stakeholder Project (2024). Private Equity Healthcare Bankruptcies Are on the Rise. https://pestakeholder.org/reports/private-equity-healthcare-bankruptcies-are-on-the-rise/

Chicago

Private Equity Stakeholder Project. Private Equity Healthcare Bankruptcies Are on the Rise. 2024. https://pestakeholder.org/reports/private-equity-healthcare-bankruptcies-are-on-the-rise/.

Wikipedia

{{cite report |author=Private Equity Stakeholder Project |title=Private Equity Healthcare Bankruptcies Are on the Rise |date=17 April 2024 |url=https://pestakeholder.org/reports/private-equity-healthcare-bankruptcies-are-on-the-rise/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{privateequitystakeholderproject2024private, author = {{Private Equity Stakeholder Project}}, title = {{Private Equity Healthcare Bankruptcies Are on the Rise}}, institution = {Private Equity Stakeholder Project}, year = {2024}, month = apr, url = {https://pestakeholder.org/reports/private-equity-healthcare-bankruptcies-are-on-the-rise/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }