It’s a story playing out across the country as Wall Street’s recipe for making big bucks flipping hospitals collides with labor costs and surging interest rates. Combined with increased scrutiny on private equity tactics, ailing hospitals are finding themselves left without access to buyers of last resort. And that’s threatening to leave low-income communities without critical care such as emergency rooms.
But financial distress is ubiquitous, including in the suburbs. Pipeline Health System, a private equity backed operator of hospitals and clinics serving mostly government-insured patients, closed the 230-bed Westlake Hospital near Chicago in 2019 just months after agreeing to keep it open for at least two years, according to a report by the Private Equity Stakeholder Project and court filings. The community sued, resulting in a $1.
After some earlier rulings, a trial to decide whether to hold Prospect accountable for the closing won’t likely take place until next year. Prospect has said it wanted to convert the facility to a behavioral-health hospital this year, but there is no sign of activity at the site. An Atlanta nonprofit agreed to buy the facilities last year. In August, Rhode Island deemed the application incomplete.