Private Equity Ownership Raises Questions For Florida Healthcare Facilities

Private equity firms are acquiring healthcare facilities across Florida at an accelerating pace, raising questions about financial sustainability and patient access to care. Recent analysis shows that about half of rural hospitals in the United States had negative operating margins in early 2024, creating conditions where private capital buyouts appear attractive to struggling facilities but carry significant financial risks.

Understanding Private Equity Healthcare Acquisitions

Private equity firms deploy large pools of debt to buy privately held companies or to take public companies private. Their eventual goal is to sell those assets at a profit. In a buyout, PE firms acquire a controlling or entire ownership stake in a company and work to improve operational efficiency. That often involves cost-cutting strategies to generate more returns for investors.

Kindred Hospital North Florida in Green Cove Springs, located about 30 miles from Jacksonville, went private in 2021 when investors acquired its parent company for more than $4 billion. The facility runs a long-term acute care facility and a rehabilitation unit, primarily treating patients with critical illnesses such as respiratory failure, sepsis, and stroke. Before the buyout, Kindred was sitting on substantial debt and suffering from declining revenues.

ScionHealth, the care network that absorbed Kindred, is under Apollo Global Management’s control. Apollo is one of Wall Street’s largest powerbrokers, overseeing more than $800 billion in assets. The firm controls about 220 hospitals, making it the country’s single largest private equity owner in the space.

Financial Pressures Driving Healthcare Consolidation

In early 2024, about half of rural hospitals in the United States had negative operating margins, meaning they were losing money on patient services and related activities, according to the healthcare consulting firm Chartis. That represents an increase from 43% in 2023.

Harold Miller, who leads the Center for Healthcare Quality and Payment Reform, notes that private equity investment can be a lifeline for some struggling hospitals. For others, the issues run deeper than cash can address. It is not necessarily the case that a private equity firm or anyone else coming in to take over the hospital will be able to fix the problems, because the challenge really comes from the health insurance side.

As more Americans switch from Medicare to Medicare Advantage, under-resourced hospitals face additional strain. Advantage plans typically provide hospitals with lower reimbursements for health treatments than traditional Medicare. Associated insurers are known to frequently reject claims, delaying or denying payment for services deemed unnecessary.

As of 2025, more than half of Medicare beneficiaries have switched to Advantage plans, which are privately operated. That has reduced critical revenue for small and generally rural facilities, according to the American Hospital Association.

How Private Equity Structures Impact Hospital Operations

Within hospitals acquired by private equity, one of the first expenses on the chopping block is labor, according to a 2021 analysis of PE impacts on the industry. Among the hospitals studied, total employment fell by about 6% in the first four years post-acquisition and stayed lower thereafter. Wage expenses fell by up to 9% after eight years. Employees in administrative roles were most affected by the job cuts, while core medical staff remained largely insulated.

The researchers suggest private equity transactions improved efficiency and short-term profitability without measurable harm to care quality. However, private capital has its limits.

Debt used to finance a hospital buyout often falls on the facility itself. Acquired hospitals are expected to shoulder a large portion of the purchase price, typically by meeting revenue targets. Their physical assets, including land and buildings, serve as collateral. That places the brunt of the financial burden on the hospital itself, which should be focusing on health outcomes rather than meeting profit metrics, according to Eileen Appelbaum, co-director of the Center for Economic and Policy Research.

Private equity firms also charge acquired hospitals for their management services. Leonard Green & Partners, which owned hospital operator Prospect Medical Holdings, collected more than $13 million in fees from the now-defunct healthcare chain, according to a recent report from the U.S. Senate Budget Committee. The payments, along with $424 million in payouts to Leonard Green investors, saddled Prospect with debts it eventually defaulted on.

Florida Facilities Face Unique Challenges

Affiliation with a large healthcare entity can help small hospitals negotiate with insurers, but at a cost. Steward Health Care owned more than 30 hospitals across the United States, including eight in Florida, before it imploded last year. The company had racked up more than $9 billion in total liabilities by the time it filed for bankruptcy. Several of its facilities have shuttered, some temporarily and others permanently.

Orlando Health bought three of Steward’s Florida facilities in October 2024. The remaining five, located in South Florida, were surrendered to Steward’s landlord, Medical Properties Trust, as part of a bankruptcy settlement.

In areas where Steward hospitals have shut down, some seeking care have to travel at least 30 minutes to reach a provider who can treat severe injuries. Closures have strained nearby facilities and taxpayers. State and local governments, with the help of community nonprofits, have drawn on tens of millions of dollars to bail out bankrupt hospitals. Some have raised property taxes to cover care gaps and to pay down the levies Steward and Prospect were delinquent on.

Regulatory Responses To Private Equity Healthcare Deals

A series of high-profile scandals and recent hospital bankruptcies have raised concerns about whether PE investors have avoided oversight designed to protect patients and ensure fair billing practices. A group of senators alleged in January that Wall Street’s priorities are misaligned with those of the healthcare field, prompting some states to make targeted policy changes.

California recently passed a new bill designed to limit the role of private equity in healthcare. The bill prohibits PE or hedge fund investors from influencing decisions across health systems, including payments. The move comes after Massachusetts passed similar legislation in January, which expanded transaction disclosure requirements for private equity investors following the collapse of Steward Health Care.

Daniel Sternthal, a Texas-based attorney who represents healthcare providers including hospitals, said with sufficient political will, the proposed changes could serve as protection against problematic incentives in the industry. A threshold question for a country is how healthcare should be delivered. Should it be based solely on this type of model, or is there a need for an alternative approach to insulate healthcare from market pressures?

Community Impact Of Hospital Financial Distress

If a distressed facility is a community’s only care provider, locals have little choice but to bail it out, said Rui Guo, a University of Florida graduate student who has studied private equity ownership in hospitals. Guo noted the Steward and Prospect failures raise critical questions about the sustainability of highly leveraged hospital buyouts.

Using leverage in the acquisition may pose a risk to the community’s access and welfare. It really depends on whether this kind of acquisition is saving the hospital in this standalone area or destroying it.

Healthcare organizations should monitor these trends closely because they affect strategic planning, financial stability and community obligations. Understanding the financial mechanics of private equity deals helps healthcare leaders make informed decisions about partnerships and affiliations.

Financial Planning In An Uncertain Market

Sometimes, private equity deals can rescue hospitals teetering on the brink of bankruptcy. Other times, it can drive indebted facilities deeper into financial trouble, leaving patients in difficult situations. Healthcare financial leaders should prepare for continued market consolidation and carefully evaluate strategic options. Each affiliation decision carries different implications for operational control, financial obligations and community service commitments.

Organizations should conduct thorough due diligence on potential partners, understanding not just the immediate financial benefits but also long-term obligations and risks. The experiences of facilities under private equity ownership in Florida and nationwide provide important lessons for healthcare executives considering similar arrangements.

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