NYU stern urges stricter rules on private equity in healthcare
NEW YORK, UNITED STATES — A new report from the NYU Stern Center for Business and Human Rights warns that private equity ownership in United States healthcare facilities is contributing to poorer patient outcomes, staffing reductions, and heightened bankruptcy risks, calling for urgent reforms and stronger oversight, MedCity News reports.
The report analyzed peer-reviewed health research, bankruptcy records, transaction data, and case studies of health systems such as Steward Health Care and Prospect Medical.
It found that private equity investments, totaling more than $1 trillion over the past decade, have sometimes compromised the quality and stability of healthcare delivery.
Private equity’s impact on hospitals and clinics
According to the report, private equity ownership is linked to a 25% increase in in-hospital complications, a 4.4% reduction in nursing staff, and an 11% higher patient mortality rate in nursing homes.
Bankruptcy risk also rises dramatically: PE-owned healthcare companies are ten times more likely to fail. In 2023 alone, 34 private equity-backed healthcare businesses filed for bankruptcy.
“The private equity model needs to be adapted for the healthcare sector, because otherwise, they’re an unhealthy fit. Here, on the one side, you have a business model that is based on public anonymity, legal immunity, remote and financialized ownership and a lack of self-restraining norms. On the other side, you have a sector where all the stakes are life and death,” said Michael Goldhaber, author of the report.
The bankruptcies of Steward Health and Prospect Medical illustrate the consequences, disproportionately affecting low-income and rural communities.
Steward Health, owned by Cerberus Capital Management from 2010 to 2021, went bankrupt in 2024, while Prospect Medical, backed by Leonard Green & Company, failed in 2025.
Recommendations for reform and healthcare providers
Goldhaber emphasized that the report does not advocate banning private equity. Instead, it recommends reforms to align PE practices with patient safety.
Proposed self-regulation measures include ongoing public reporting of finances, patient outcomes, and workforce data, avoiding debt-funded dividends and sale-leaseback deals, and limiting debt-to-cash-flow ratios to prevent harmful cost-cutting.
State and federal governments are also urged to tighten oversight.
Recommendations include empowering regulators to block risky acquisitions, deter financially risky practices through government payment eligibility, and hold parent companies accountable for fraud or mismanagement.
Congress could require detailed SEC disclosures and restrict certain investment access for noncompliant PE firms.
For hospitals, clinics, and health systems, the report underscores the importance of carefully evaluating partnerships with private equity firms, while exploring outsourcing and operational support solutions to maintain care quality and financial stability amid complex ownership structures.
