Private equity firms have quietly wormed their way into more than 500 nonprofit hospitals, hospices, and health systems across the United States, and because the deals are private, almost nobody knows what they actually own. A new report from the watchdog group Private Equity Stakeholder Project wants the government to start paying attention before the next Steward Health disaster kills someone else's local emergency room.
The Iceberg Nobody Wants to Look At
The Private Equity Stakeholder Project, a longtime critic of the industry, published a report this week cataloguing more than 500 joint ventures between private equity firms and nonprofit healthcare providers. The list runs from rural hospitals to major religiously affiliated health systems to hospice care operators. Jim Baker, PESP's founder and executive director, was blunt about what that number represents. "We think this just scratches the surface," he told The Guardian.
Here's the thing that should alarm you: private equity firms are not legally required to disclose what they own. They are private. That's sort of the whole point. So a for-profit investment fund with a 5-to-7-year exit horizon and a fiduciary obligation to make its wealthy investors richer can sink money into the hospital where your grandmother is recovering from a hip replacement, and you would have absolutely no way of knowing. The fund doesn't have to tell you. The hospital doesn't have to tell you. Nobody does.
According to researchers at New York University cited in the PESP report, private equity has pumped more than $1 trillion in debt-financed deals into American healthcare over the last decade. One trillion dollars. Debt-financed. In hospitals. Let that settle.
What 'Nonprofit' Is Supposed to Mean
The tax math here is not subtle. Nonprofit healthcare organizations enjoy an enormous financial benefit: they don't pay taxes. In exchange for that benefit, they are legally obligated to pursue a charitable purpose. They exist, in theory, to serve their communities, not to generate returns for pension funds and university endowments.
Erin Fuse Brown, a health policy professor at Brown University School of Public Health and the author of a recent Stanford Law Review article on private equity in healthcare, told The Guardian she doesn't think it's "an irrelevant question" to ask whether there's tension between a nonprofit hospital and a for-profit investor group joining forces. That is academic language for: this is a problem.
The legal framework governing these joint ventures traces back to two IRS rulings from 1998 and 2004. In broad terms, the IRS said nonprofits could keep their tax-exempt status as long as they maintain control over their mission, their duty to promote community health takes priority over generating profit, and the joint venture itself furthers charitable purposes. Whether that's actually happening in practice when Apollo Global Management is involved? That's the question nobody in government appears to be asking.
Steward Health: A Horror Story With a Body Count
If you want to understand what happens when private equity gets its hooks into a hospital network and nobody stops it, look at Steward Health. It started as a religiously affiliated nonprofit. Then private equity firm Cerberus Capital Management came along, and by 2017 Steward had become the largest private for-profit hospital system in the entire United States. By 2024, it was in bankruptcy court, drowning in $9 billion in debt.
According to extensive reporting by the Boston Globe, hundreds of millions of dollars in profit had been extracted for investors during that period, including for the company's own CEO. Buildings fell into disrepair. Hospitals ran out of basic medical supplies. Two hospitals closed entirely: one in the Dorchester neighborhood of Boston, another in Pennsylvania. Real communities, real people, left without a hospital because the math stopped working for the investors.
One of the mechanisms that accelerated this collapse was the sale-leaseback. A hospital sells its property to a real estate investment trust. The REIT leases the building back to the hospital. Everyone gets a cash infusion up front. The hospital then carries that lease as a permanent added expense, often on a building that was originally constructed with public money. PESP's report found this practice showing up in nonprofit joint ventures too, citing the example of LifePoint Health after it was acquired by Apollo Global Management in 2018. Shortly after the deal closed, nine hospitals in LifePoint's joint venture network had sold their properties to REITs.
The Government's Current Response: Nothing
PESP is calling for greater government oversight of these arrangements. That's the ask. More oversight. A relatively modest request given that $1 trillion has flowed into an industry where the product is keeping sick people alive.
The report also points to a major study published in JAMA suggesting that private equity buyouts can lead to more serious medical errors. To be fair, The Guardian notes that academics are split on whether private equity poses a unique risk to healthcare outcomes, or whether other factors explain the data. The science isn't fully settled. The policy response, however, is not exactly a close call: when you have 500 disclosed joint ventures and a watchdog saying the real number is almost certainly higher, and the companies involved have no legal obligation to tell anyone what they own, the answer is probably to start requiring disclosure.
Private equity firms will tell you they employ more than 13 million Americans and contribute $2 trillion to US GDP. That's the industry's own accounting, so take it at whatever value you assign to self-reported statistics from people who have a financial interest in looking good. The question isn't whether private equity creates any value anywhere. The question is whether the incentive structure of a short-horizon, debt-fueled investment fund is compatible with running a hospital in a rural county where there is no other option.
The Dingo Take
What's happening here is not complicated. A legal gray zone created by two IRS decisions from the late 1990s has allowed profit-seeking investment funds to quietly take stakes in institutions that receive tax exemptions specifically because they are supposed to prioritize community health over returns. More than 500 of these arrangements exist that PESP has found so far, with no federal requirement that any of them be publicly disclosed. The industry is private. That's the whole structure.
Steward Health is not ancient history. The bankruptcy was 2024. The hospitals closed. The money left. The patients stayed. And the political response has been, generously described, underwhelming. Congress has held hearings. Academics have published papers. Watchdog groups have written reports. Meanwhile private equity just keeps writing checks.
PESP wants more government oversight. That seems like the bare minimum. These nonprofit healthcare providers are getting a massive tax benefit paid for by the public. The public has a right to know who is actually running the institution and what they are extracting from it. Transparency isn't a radical demand. It's the price of the tax break.
