A recent study has revealed significant risks associated with hospitals owned by real estate investment trusts (REITs). According to the findings published in the British Medical Journal on March 15, 2024, hospitals acquired by REITs were found to be 5.7 times more likely to close or file for bankruptcy within four years compared to those not acquired by such entities.
The study analyzed a range of hospitals, concluding that 25% of the REIT-acquired institutions either closed or declared bankruptcy during the research period. In contrast, only 4% of non-acquired hospitals experienced similar outcomes. This stark disparity highlights the potential vulnerabilities in the business model of hospitals transitioned to REIT ownership.
Joseph Dov Bruch, an assistant professor of public health sciences at the University of Chicago and one of the authors of the study, emphasized the need for greater scrutiny of REIT-owned hospitals. He noted that as of 2021, only 3% of hospitals in the United States were owned by REITs, making them a largely overlooked segment in academic and policy discussions.
The implications of these findings are significant, particularly in light of the well-publicized failure of Steward Health Care. Eight years prior to its collapse, the chain sold its properties to a REIT, a move that many believe contributed directly to its eventual demise. This case serves as a cautionary tale regarding the impact of private equity and real estate investment on the stability of healthcare institutions.
As the healthcare landscape continues to evolve, the study’s findings may prompt policymakers and stakeholders to reconsider the role of REITs in hospital ownership. The data presented raises critical questions about the sustainability of hospitals under such financial models, especially in a time when healthcare access and reliability are paramount for communities across the globe.
Bruch’s research calls for a deeper examination of the operational and financial practices of REIT-owned hospitals. He advocates for enhanced transparency and accountability measures to safeguard patient care and ensure the long-term viability of these vital institutions.
The findings from this study serve as a timely reminder of the complexities involved in healthcare ownership and the potential risks associated with financial investment strategies. As discussions around healthcare reform continue, understanding the implications of ownership structures will be crucial in shaping future policies that prioritize patient welfare and institutional sustainability.
