In a staggering blow to healthcare access, two major hospital chains owned by private equity firms have crumbled into bankruptcy, leaving communities across the U.S. stranded without vital medical services.
According to the Daily Mail, Prospect Medical Holdings and Steward Health Care, burdened by financial mismanagement and massive investor payouts, have shuttered hospitals and triggered millions in taxpayer-funded bailouts amid a growing crisis.
The downfall of these hospital chains began years ago, rooted in the actions of their private equity owners. Prospect Medical Holdings, under Leonard Green & Partners, and Steward Health Care, owned by Cerberus Capital Management, aggressively acquired struggling hospitals over the past decade. Between 2011 and 2018, these firms siphoned millions of dollars from the chains to benefit investors, according to reports from The Wall Street Journal.
Prospect alone paid out $654 million in dividends and share sales from 2012 to 2018, a move that left the company cash-strapped. A bipartisan congressional committee report later concluded that these payouts directly contributed to Prospect’s financial collapse. Similarly, Steward’s operations were depleted by significant financial extractions during the same period, weakening its ability to sustain operations.
Steward’s troubles deepened under the leadership of its former CEO, Ralph de la Torre, who took majority ownership in 2020. According to filings revealed by The Wall Street Journal, de la Torre received personal payments of at least $250 million over the following four years. These funds were used for lavish purchases, including a $7.2 million ranch in Texas and a $40 million yacht.
Steward is now suing de la Torre, alleging he defrauded the company of $262 million and squandered $1.1 billion on overpriced hospital deals in Florida. A complaint filed in July 2025 claims these investments, overpaid by about $200 million, were driven by de la Torre’s ambition to expand his hospital empire. Filings also show that de la Torre and other executives paid themselves a $111 million dividend in 2021, despite knowing Steward faced financial peril as early as 2016.
The consequences of these financial decisions came to a head when Steward filed for bankruptcy in 2024. As part of its proceedings, Steward closed two Massachusetts hospitals, Carney Hospital in Dorchester and Nashoba Valley Medical Center in Ayer, while selling off six others. Prospect followed suit, filing for bankruptcy in January 2025 after collapsing under mounting debt.
Prospect’s bankruptcy led to the closure of two Pennsylvania hospitals, Crozer-Chester Medical Center and Taylor Hospital, in 2025. These closures have forced residents to rely on emergency services for routine medical needs, straining local resources. “A lot of people are calling emergency medical services for things for which you'd go to your family physicians,” said Shane Wheeler, chief of staff for the Volunteer Medical Services Corps of Lansdale.
“We're seeing a high level of uncompensated care,” added Wheeler, highlighting the burden on emergency providers. Some residents now face wait times exceeding a year for doctors’ appointments due to the shuttered facilities.
The closures have disrupted healthcare access for communities across California, Connecticut, Pennsylvania, Rhode Island, and beyond, where Prospect once operated 16 hospitals and over 165 clinics.
The fallout from these bankruptcies extends beyond healthcare access, hitting taxpayers hard. Communities impacted by the collapses of Prospect and Steward have spent tens of millions of dollars to bail out struggling providers. These funds have been drawn from state and local governments as well as nonprofit community organizations, according to reports.
Adding to the financial strain, both hospital chains have left behind unpaid property taxes and other bills. Some communities have been forced to raise property taxes to cover these deficits, as noted by The Wall Street Journal. The economic ripple effects continue to burden residents already grappling with diminished medical services.
The collapse of these hospital chains has left a void in critical healthcare services across the nation. Once seen as saviors for acquiring struggling facilities, Prospect and Steward have instead become symbols of private equity’s troubling influence on healthcare. Their downfall serves as a cautionary tale about prioritizing profits over patient care.
Efforts to seek comment from the involved parties have yielded no response. The Daily Mail reached out to Prospect Medical Holdings, Steward Health Care, Leonard Green & Partners, and Cerberus Capital Management for statements. As the situation unfolds, affected communities continue to navigate the devastating consequences of these corporate failures.