Another common tactic is the sale-leaseback strategy, in which an acquired entity’s real estate is sold off to a third party who then charges it rent to use the land and facilities with the proceeds from the sale funneling back to the PE firm. In the widely publicized example of Steward Health Care, a PE-acquired hospital network with 30 hospitals across multiple states currently facing bankruptcy, sales of its real estate to Medical Properties Trust covered the entire purchase price for the PE owner Cerberus and created 800 million dollars in additional profit. Cerberus then sold the heavily indebted entity back to a group of its own doctors, and Steward is now failing to meet both rent and debt obligations.¹⁵

The same playbook seen across many industries with PE investment can have especially negative effects on the health care workforce. “Private equity is generally highly leveraged, profit focused, and has a short-term mindset,” explains Jim Dahle, MD of the White Coat Investor. “Good docs tend to be driven elsewhere, burnout levels tend to increase, and capital is used for profit rather than investing in the long-term viability of the business. Undercapitalized hospitals don’t pay their vendors, don’t maintain and purchase needed equipment and supplies, and run overly lean staffing models.” Indeed, when 156 private equity-acquired hospitals were compared to 1,560 matched controls, they lost 24 percent of their capital assets over the first two years after acquisition.¹⁶

Proponents of the private equity model argue that it can be used to identify and increase economies of scale, yet a growing body of evidence finds that both hospital and physician costs increase after private equity acquisition, and that these costs are typically passed on to the patient.^6,17-18 In a 2023 systematic review, no studies showed decreased costs to patients or payors, and the effect of PE ownership on quality of care measures was “mixed to harmful,” a pattern that has continued in subsequent studies.^19,20 The more granular effects of acquisitions on physician pay, for example, can be hard to quantify, as contracts, business practices, and revenues are often shrouded in secrecy.

A statement from Envision argued that their internal data shows that Envision clinicians exceed national quality benchmarks. “Our physician-led teams are guided by the delivery of high-quality, clinically-appropriate evidence-based care,” the Envision statement said. “They make hiring decisions locally in partnership with hospitals based on communities’ needs. All clinicians—no matter the stage of their career—undergo a rigorous screening process and are hired by local physician leaders if they and the clinician believe it’s a fit.”