Hospitals owned by real estate investment trusts (REITs) face a significantly higher risk of closure or bankruptcy compared to those not acquired by such entities. A recent study published in the British Medical Journal highlights that hospitals acquired by REITs are 5.7 times more likely to close or file for bankruptcy within four years.
The research examined a range of hospitals and found that nearly 25% of those owned by REITs either closed or declared bankruptcy during the study period. In stark contrast, only 4% of hospitals that remained independent experienced similar fates. This stark difference raises concerns about the impact of real estate ownership on hospital viability, particularly in a healthcare landscape increasingly influenced by financial investors.
The findings echo the situation surrounding Steward Health Care, a private equity-backed hospital chain that sold its properties to a REIT eight years before its well-documented collapse. According to Joseph Dov Bruch, an assistant professor of public health sciences at the University of Chicago and co-author of the study, the data offers a critical perspective on the long-term sustainability of hospitals under REIT management.
Insights on REIT Ownership in Healthcare
The study indicates that while only 3% of hospitals in the United States were owned by REITs as of 2021, their influence on the healthcare system is significant enough to warrant increased scrutiny from academics and policymakers. The research highlights a growing concern that the prioritization of financial returns by REITs could undermine the mission of healthcare institutions to provide essential services to their communities.
Bruch emphasized that the study’s findings could serve as a wake-up call for stakeholders in the healthcare sector. The potential consequences of financial ownership models could have far-reaching implications, particularly as the healthcare system navigates ongoing challenges, including funding shortages and rising operational costs.
The implications of this research extend beyond mere statistics. The closure of hospitals can lead to diminished healthcare access for communities, impacting patient outcomes and overall public health. As the study suggests, examining the financial structures behind hospital ownership is crucial for understanding the potential risks involved.
In conclusion, the trend of hospital acquisitions by REITs raises important questions about the future of healthcare delivery. As the study reveals, a critical reevaluation of these ownership models may be necessary to ensure that hospitals are equipped to serve their communities effectively, rather than prioritizing short-term financial gains.
