On May 2, 2025, Crozer-Chester Medical Center — the last remaining Level 1 trauma center in Delaware County, Pennsylvania — closed its doors, less than 10 years after it was purchased by Prospect Medical Holdings. Prospect is a for-profit healthcare company owned by Los Angeles-based private equity (PE) firm Leonard Green & Partners. In 2016, Prospect purchased the four-hospital nonprofit Crozer Health system (which also included Delaware County Memorial Hospital, Springfield Hospital and Taylor Hospital) with promises of investment and revitalization. Instead, Prospect raided the hospitals to line its own pockets, even as it dramatically reduced services, and conditions deteriorated. When there were no more assets to loot, Prospect shuttered Delaware County Memorial Hospital and Springfield Hospital in 2022. In 2025, Prospect filed for Chapter 11 bankruptcy and closed Taylor Hospital and then Crozer-Chester one month later, after receiving approval from the bankruptcy court.
What happened at Crozer Health — which had served patients since the Civil War — was the predictable outcome of private equity doing exactly what it is known to do. The business model for PE firms is to strip cash out of a business, load it with debt, and reduce every conceivable expense, all to make short-term profits for investors. The general goal of private equity is to sell the restructured business for a higher price within a few years. But when dealing with critical medical care, profitability goals should not be the foremost consideration.
In the case of Crozer Health, Prospect funded $457 million in dividends to its investors through a $1.12 billion loan, according to a lawsuit filed by the Pennsylvania Attorney General. To pay back the loan, Prospect sold and leased back Crozer’s real estate holdings, which saddled Crozer with $35 million in annual rent, which it could not afford. With Crozer financially bleeding out, Prospect shuttered a variety of healthcare services, failed to timely pay its staff and vendors, and lost accreditation of a surgical residency program, according to the lawsuit. Not surprisingly, patient care suffered.
A bipartisan investigation by the U.S. Senate Budget Committee into ways in which private equity investment in healthcare has negative consequences for patients and providers found a “significant increase” in health and safety violations issued by the Centers for Medicare and Medicaid Services (CMS) against Crozer after Prospect acquired it. CMS citations against Crozer-Chester Medical Center included:
- Failure to maintain sanitary conditions by not properly disinfecting endoscopes prior to reuse, potentially exposing patients to serious infections due to inadequate staff training and oversight.
- Failure to oversee and enforce facility policies, infection control and high medical standards.
- Failure to maintain a safe physical environment so as to constitute an “immediate jeopardy” violation, which is the most serious noncompliance with healthcare regulations because it can potentially cause serious harm or deaths to patients. CMS detailed the hospital’s failure to address multiple environmental risks — such as unsecured furniture, lack of tamper-resistant electrical outlets, and inadequate monitoring of high-risk areas — that placed patients, particularly in behavioral health units, in danger.
- Failure by the medical staff to respond in a timely manner to a patient in distress.
- Failure to implement measures to prevent an incapacitated patient from eloping, which is when a patient leaves a hospital without the staff being aware.
The investigation also noted that by 2020 Prospect had terminated 170 full-time employees, including 25 positions in physician practice groups, across the Crozer system, which saved the company $13 million, but left patients without numerous care providers. That year, Crozer paramedics would try to fuel up ambulances only to have the company credit card rejected, according to news reports.
Also under Prospect’s stewardship, Crozer-Chester Medical Center endured two fires and two floods in a four-day time span, which twice caused the hospital to temporarily close. One of the fires broke out in the electrical room that controlled the ICU unit and necessitated the evacuation of 38 patients — most of them ICU patients, including women in labor — to other hospitals.
With the closure of Crozer-Chester Medical Center, the nearest available trauma centers at Penn Presbyterian in West Philadelphia or Christiana Hospital in Newark, Delaware, are 30 minutes away with “lights and sirens,” according to a former Chester police captain whose life was saved at Crozer after he suffered multiple gunshot wounds in the line of duty. He credits his quick transport to Crozer — within 5 minutes — as one of the reasons he is still alive.
The former president of the Crozer-Chester Nurses Association has warned that without the hospital, shooting victims will die, mothers will give birth outside their community, and behavioral health patients will wander the streets. And because nearly one-in-three of Chester’s 33,000 residents live in poverty, many will have difficulty accessing healthcare because they lack reliable transportation.
Unfortunately, tragedies like what happened at Crozer Health are becoming all too common as PE firms devour hospitals to turn a profit.
The nonprofit Private Equity Stakeholder Project reports that nearly 400 U.S. hospitals are owned by PE investors, representing 1 out of every 3 for-profit hospitals. Private equity — with its profit-centered focus — is also devouring medical practice specialties, including urology, ophthalmology, cardiology, oncology, radiology, orthopedics, behavioral health, gastroenterology, dermatology, and obstetrics and gynecology, to name a few. In 2021, private equity investment in healthcare reached an all-time high of 515 deals valued at $151 billion, according to the Senate Budget Committee investigation. The Government Accountability Office estimates that 5 percent of about 14,800 nursing homes enrolled in Medicare had private equity owners in 2022. Notwithstanding the Crozer Health debacle, Prospect Medical Holdings presently owns 12 hospitals in four states, according to the company website.
In Boston, about 300 miles away from Crozer Health, investigative journalists exposed extensive financial mismanagement and multiple deaths attributable to substandard medical care at Steward Health Care, which was founded in 2010 when PE firm Cerberus Capital Management bought six struggling community hospitals from the Boston Catholic Archdiocese. Steward then went on a buying spree and acquired 31 hospitals across eight states all told.
Among the deaths that journalists exposed at Steward Health Care:
- A new mom was bleeding heavily from her liver one day after giving birth, but doctors at the PE-owned hospital could not properly and immediately treat her because the hospital did not have an embolization coil, which is a common medical device used to stem internal bleeding. Weeks earlier, the manufacturer had repossessed its coils because the hospital had not paid its invoices. The mom had to be transferred to another hospital, where she died on the operating table hours later.
- A patient arrived in an emergency department (ED) with the classic heart attack symptoms of acute chest pain and shortness of breath. Faced with a long registration line, he left the line to get help from a triage nurse, who sent him back to the line without taking his vital signs or doing an assessment. One hour later, he collapsed to the floor and died. Nineteen nurses were supposed to have been on duty in the ED. There were only eight.
- An 88-year-old woman was diagnosed with a perforated bowel that needed immediate surgery, but the hospital did not have a general surgeon on call to perform the operation. Two other area hospitals owned by Steward Health Care declined to take her, which wasted life-saving hours. The patient was finally approved for a transfer to a hospital more than an hour away but died en route.
- A 31-year-old patient was in a mental health crisis for which he had to be physically and chemically restrained. Although hospital policy dictated that a patient bound by restraints must never be left alone, the ED was understaffed that night, and there were not enough people for one-on-one monitoring. The patient died alone of respiratory arrest.
- A doctor ordered a 90-year-old patient to be on a cardiac monitor. A cardiac tech, who was monitoring patients from another floor, notified a nurse that one of the patient’s leads was off, but failed to notify her that the patient’s heart had stopped pumping. The nurse “prioritized another patient,” and did not check on the cardiac patient. A relative found the cardiac patient dead 20 minutes later.
- A 66-year-old man who was about to begin chemotherapy for pancreatic cancer was taken by ambulance to an ED the day after Thanksgiving because he had been vomiting and feeling weak. The ED was severely understaffed, with only 11 nurses caring for 95 patients at one point. The man was placed on a stretcher in a hallway that was so crowded that his wife had nowhere to stand and ultimately went home. He was later found unresponsive in the hallway from cardiac arrest, and staff could not resuscitate him.
Steward Health Care, like Prospect, ultimately filed for Chapter 11 bankruptcy and closed some of its 31 hospitals (including two in Boston). Other Steward hospitals were sold, some to healthcare systems, but some astoundingly to other PE firms. Cerberus Capital Management reportedly walked away with an $800 million profit from its investment, all while supplies were short, medical equipment was repossessed, vendors went unpaid, and the system was burdened with hundreds of millions of dollars in rent after the land and buildings were sold out from under the hospitals. As the hospital system imploded, the CEO of Steward reportedly purchased a $40 million yacht.
And lest there be any suggestion that the problems at Crozer and Steward were deviations from the norm, and that other PE-owned hospitals are well-run, well-resourced, and provide high-quality patient care, a multi-year study published in the premier medical research journal JAMA provides evidence to the contrary. The study found that after PE acquisition, Medicare beneficiaries admitted to PE hospitals experienced a 25.4 percent increase in hospital-acquired adverse events compared with those treated at control hospitals.
The Senate Budget Committee’s investigation also examined a series of sexual assaults against nine incapacitated female patients at an Iowa hospital that is part of LifePoint Health, a health system owned by PE firm Apollo Global Management. Among other alarming findings, investigators found that “financial factors” may have contributed to the continued employment of a male nurse practitioner who had been assaulting patients for two years before he died of a drug overdose. Despite concerns that had been escalated by staff, the cost of recruiting a new hospitalist and lack of adequate staffing may have played a role in the nurse’s continued employment, according to the investigators.
The Push for Reform
Since the closure of Crozer Health, Pennsylvania Gov. Josh Shapiro has pushed for legislation that would prevent for-profit companies from treating the Commonwealth’s hospitals “like piggy banks they can smash and walk away from.”
In June, the Pennsylvania House of Representatives passed with bipartisan support a bill that would empower the Office of Attorney General to review and, when necessary, block or place conditions on sales involving healthcare institutions and for-profit buyers. Twenty-four other states already give attorney generals this authority, according to the governor’s office.
The bill additionally bans sale-leaseback schemes — like the one used at Crozer — that drain hospital resources by forcing them to sell their own facilities and rent them back at inflated rates.
The legislation is now before a committee in the Pennsylvania Senate.
With respect to the other broken piggy banks cited in this blog: In Massachusetts, following the collapses of Steward Health Care, a bill increasing state oversight of PE investments in healthcare was signed into law in January 2025. In Iowa, where multiple patients were sexually assaulted, a bill is presently pending in the state legislature which would require the Department of Inspections, Appeals and Licensing to review any acquisition of housing or healthcare facilities by a private equity firm.
At the federal level, Massachusetts Sen. Elizabeth Warren introduced a bill in the 118th Congress that would have regulated the involvement of private equity in the healthcare industry. While the bill did not advance, Warren signaled that she is not done with the issue when she brutally grilled Stephen Feinberg, the co-founder and former CEO of Cerberus Capital Management, at a February 2025 hearing of the Senate Armed Services Committee to consider his nomination to be Deputy Secretary of Defense.
What Should I Do If I Believe I Have Been Injured by Medical Malpractice at a Private Equity Hospital?
Mark W. Tanner, a medical malpractice attorney and partner at Feldman Shepherd, said that all hospitals — whether owned by PE firms or other entities — are required to adhere to well-established standards of care. If you believe that you or a loved one has been injured by medical negligence, which includes unsafe practices that prioritize profits over patients, he recommends consulting with an attorney immediately to ensure that your legal rights are protected.
“A business model designed to save money at the expense of people’s lives should never be acceptable. Regrettably, the “profit-at-all-cost” mentality has spread like a cancer among our healthcare institutions, and the last line of defense for patients remains the civil jury system. It is up to everyday folks, who sit as jurors and hear these facts, to make sure that such practices are not “profitable,” as that is the most effective method of deterrence,” Tanner said.