A recent study highlights a concerning trend regarding hospitals owned by real estate investment trusts (REITs). According to research published in the British Medical Journal on March 15, 2024, hospitals acquired by REITs are significantly more likely to close or file for bankruptcy compared to those that remain independent. The findings suggest that the financial model employed by REITs may jeopardize the stability of healthcare facilities.
The study found that hospitals owned by REITs were 5.7 times more likely to shut down or declare bankruptcy within four years of acquisition. Specifically, 25% of the REIT-acquired hospitals examined either closed their doors or filed for bankruptcy during the study period. In contrast, only 4% of non-acquired hospitals experienced the same fate. This stark contrast raises critical questions about the impact of ownership structures on hospital viability.
Joseph Dov Bruch, an assistant professor of public health sciences at the University of Chicago and one of the study’s authors, noted that despite the alarming statistics, only 3% of U.S. hospitals were owned by REITs as of 2021. This low percentage has led to limited academic and policy attention on the subject, despite the evident risks associated with such ownership models.
The historical context of these findings is underscored by the collapse of Steward Health Care. Eight years prior to its highly publicized downfall, the hospital chain sold its properties to a REIT. The timing of this transaction and the subsequent decline of Steward Health Care has fueled speculation that the REIT ownership model played a direct role in its financial struggles.
The implications of this research are significant for policymakers and healthcare stakeholders. As the healthcare industry continues to evolve, understanding the effects of different ownership structures on hospital performance is crucial. The study calls for a deeper investigation into how REIT ownership influences not only financial outcomes but also the quality of care provided to patients.
In light of these findings, there is a pressing need for enhanced scrutiny of hospital acquisitions by REITs. As the healthcare landscape shifts, ensuring the sustainability of hospitals is vital for maintaining access to quality medical care across communities. The data from this study provides a foundation for future discussions on the intersection of real estate investment and healthcare, urging stakeholders to consider the long-term implications of such ownership arrangements.
