Hospitals owned by real estate investment trusts (REITs) have a significantly higher risk of closure or bankruptcy compared to those not acquired by such entities. A recent study published in the British Medical Journal found that hospitals acquired by REITs were 5.7 times more likely to close or file for bankruptcy within four years than their non-acquired counterparts. This research adds to the concerns surrounding the impacts of private equity investment in healthcare.
The study highlighted that during the period examined, one-quarter of the REIT-acquired hospitals either closed or filed for bankruptcy. In contrast, only 4% of hospitals not owned by REITs faced similar fates. This stark difference raises important questions about the financial stability of hospitals under REIT ownership.
Joseph Dov Bruch, an assistant professor of public health sciences at the University of Chicago and a co-author of the study, noted that despite the significant implications, only 3% of U.S. hospitals were owned by REITs as of 2021. This limited presence has led to a lack of attention from researchers and policymakers alike, highlighting a gap in the understanding of the healthcare landscape.
The implications of the study are particularly relevant in light of the recent collapse of Steward Health Care, which sold its properties to a REIT eight years prior to its downfall. The analysis suggests that the financial structure of REITs, which typically focus on generating returns for investors, may compromise the long-term viability of hospitals.
As healthcare continues to evolve, the relationship between hospital ownership and financial performance remains a crucial area of research. Stakeholders in the healthcare sector, including policymakers and investors, will need to consider these findings when evaluating the sustainability of hospital operations under the current ownership models.
The study serves as a wake-up call regarding the complexities of funding and operating healthcare facilities in the United States. It underscores the need for further examination of how ownership structures can influence hospital performance, patient care, and community health outcomes.
