Private Equity Descends on Rural Healthcare

The report details how private equity firms are acquiring and managing rural hospitals and other health services, such as air ambulances and behavioral health centers. It argues that the pursuit of high short-term returns often leads to cost-cutting, asset-stripping through sale-leaseback transactions, and reduced access to essential services. The document provides case studies of hospital closures and quality failures, and it calls for increased regulatory oversight, limits on dividend recapitalizations, and direct public investment to safeguard rural health systems.

• Private equity firms own at least 130 rural-serving hospitals in the U.S., with the highest concentration located in the South; Texas has the most with 17 facilities.
• A significant number of private equity-owned rural hospitals utilize specific CMS payment designations to gain financial advantages, including 85 hospitals benefiting from designations such as critical access hospital (CAH) and sole community hospital (SCH).
• Private equity firms employ 'sale-leaseback' transactions to monetize real estate, which can divert cash from hospital operations into rent payments and leave facilities with fewer assets.
• The air ambulance industry is dominated by private equity, with American Securities and KKR controlling nearly two-thirds of the national market as of 2017, leading to higher costs and a higher prevalence of surprise medical bills.
• Private equity has aggressively entered the medical staffing and travel nursing sectors, capitalizing on pandemic-driven shortages; 2021 was a record year for private equity M&A of medical staffing companies.
• In the behavioral health sector, private equity acquisitions increased by more than 35% in 2021, with 123 of 153 acquisitions involving private equity firms.
• Case studies reveal severe operational failures in PE-owned rural facilities, such as the closure of Santa Cruz Valley Regional Hospital in 2022 and 'immediate jeopardy' designations at LifePoint's Wilson Medical Center due to patient safety risks.
• Private equity-backed hospital management companies, such as QHR Health, may extract revenues from nonprofit rural hospitals through management fees and by creating competing for-profit services in the same community.

APA

O’Grady, E., Bugbee, M., & Fenne, M. (2023). Private Equity Descends on Rural Healthcare. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2023/02/PE_Rural_Health_Jan2023-compressed.pdf

Chicago

O’Grady, Eileen, Mary Bugbee, and Michael Fenne. Private Equity Descends on Rural Healthcare. Private Equity Stakeholder Project, 2023. https://pestakeholder.org/wp-content/uploads/2023/02/PE_Rural_Health_Jan2023-compressed.pdf.

Wikipedia

{{cite report |last1=O’Grady |first1=Eileen |last2=Bugbee |first2=Mary |last3=Fenne |first3=Michael |title=Private Equity Descends on Rural Healthcare |publisher=Private Equity Stakeholder Project |date=January 2023 |url=https://pestakeholder.org/wp-content/uploads/2023/02/PE_Rural_Health_Jan2023-compressed.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ogrady2023private, author = {O’Grady, Eileen and Bugbee, Mary and Fenne, Michael}, title = {{Private Equity Descends on Rural Healthcare}}, institution = {Private Equity Stakeholder Project}, year = {2023}, month = jan, url = {https://pestakeholder.org/wp-content/uploads/2023/02/PE_Rural_Health_Jan2023-compressed.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }