Hospitals owned by real estate investors more likely to close or go bankrupt

Tara Bannow covers hospitals, providers, and insurers. You can reach Tara on Signal at tarabannow.70.

Eight years before Steward Health Care’s explosive, highly publicized collapse, the private equity-backed hospital chain sold its properties to a real estate investment trust. A new study adds weight to the widely-held belief that the deal precipitated Steward’s demise. 

Hospitals acquired by REITs, companies that buy real estate and pass the income they generate onto investors, were 5.7 times more likely than their non-acquired peers to close or go bankrupt four years later, according to a BMJ study published Thursday. One-quarter of the REIT-acquired hospitals examined either closed or filed for bankruptcy during the study period, compared with 4% of the non-acquired ones. 

Just 3% of U.S. hospitals were owned by REITs in 2021, so they’ve been largely overlooked by academics and policymakers, said Joseph Dov Bruch, an author on the study and assistant professor of public health sciences at the University of Chicago.