Private Equity Stakeholder Project Warns of Rising Healthcare Bankruptcies in 2024

The healthcare sector is facing a crisis as a new report from the Private Equity Stakeholder Project (PESP) reveals that a staggering 21% of all healthcare bankruptcies in 2023 involved organizations owned by financial firms. Last year set a record for bankruptcies in the healthcare industry, and experts warn that 2024 could see another wave of financial turmoil.

According to PESP, some of the largest bankruptcies in the healthcare sector last year, including Envision Healthcare, Air Methods, and the Center for Autism and Related Disorders, were all owned by private equity firms. The report highlights the alarming trend of private equity acquisitions in healthcare, which have risen dramatically in recent years.

In 2019, there were only eight private equity healthcare bankruptcies, but by 2023, that number had increased by 112.5%, with 17 healthcare organizations filing for bankruptcy. Private equity firms were responsible for 17 out of 80 total healthcare bankruptcy filings in 2023, indicating a concerning level of financial instability in the industry.

The report also points out that some private equity firms, such as KKR (Kohlberg Kravis Roberts), have multiple healthcare companies on record that have filed for bankruptcy or are at risk of default. PESP’s case studies on the largest healthcare bankruptcies in 2023 reveal that unmanageable debt from private equity ownership is a major contributing factor to the financial struggles faced by these organizations.

PESP warns that the aggressive short-term profit-seeking strategies imposed by private equity firms on healthcare organizations threaten the stability of critical healthcare resources across the country. As the healthcare sector braces for another potentially tumultuous year, stakeholders are urged to address the root causes of these financial challenges to ensure the long-term sustainability of the industry.