Wealthy Wall Street executives and high-ranking CEOs accused of causing the two most significant hospital bankruptcies in recent decades
Two major healthcare providers, Prospect Medical Holdings and Steward Health Care, have faced financial collapse in recent years, causing significant disruptions and financial consequences for affected communities.
In January 2023, Prospect Medical Holdings filed for bankruptcy, leading to the closure of two hospitals in Pennsylvania. This move followed the company's acquisition by private equity firm Leonard Green & Partners in 2010 and its subsequent decline, with liabilities reaching between $1 billion and $10 billion.
Similarly, Steward Health Care declared bankruptcy in May 2024, under the ownership of Cerberus Capital Management. Between 2011 and 2018, both companies extracted millions for their investors, employing financial strategies that prioritized short-term investor returns over hospital sustainability and patient care.
A Senate Budget Committee investigation revealed that Leonard Green extracted about $424 million directly for investors during its ownership of Prospect Medical, while the hospital system took on heavy debt and deteriorated infrastructure. Steward Health Care, under Cerberus ownership, faced allegations of fraud, with its former CEO Ralph de la Torre and his team accused of defrauding the company of $262 million and wasting an additional $1.1 billion on overpriced hospital purchases.
The bipartisan congressional committee found that the actions of Prospect Medical Holdings directly led to the company running out of cash. The collapse of both Prospect and Steward has forced communities to pay tens of millions of dollars to bail out their healthcare providers.
Some communities have had to hike property taxes due to unpaid property taxes and other unmet bills from both companies. The closure of hospitals has left some areas as healthcare deserts, with residents relying on 911 services for non-emergency care.
In Connecticut and Delaware County, Pennsylvania, communities served by these hospitals now face staff shortages, resource depletion, and uncertainty about future care access, traced back to private equity ownership and payouts. Local governments and taxpayers are also burdened by unpaid bills and pension liabilities.
Steward Health Care is currently suing its former CEO Ralph de la Torre, claiming he pilfered millions from the hospital chain as it went bankrupt. De la Torre, after taking over majority ownership of Steward in 2020, received personal payments of at least $250 million over the next four years. The Steward Health Care complaint claims that the executives paid themselves a $111 million dividend in 2021, despite knowing the company was in trouble as early as 2016.
Investigations show that private equity firms prioritized extracting financial returns for investors at the expense of hospital operational viability and community healthcare access, resulting in bankruptcies, hospital closures, and significant community hardship.
[1] Senate Budget Committee Report, "Private Equity and the Collapse of Prospect Medical Holdings" (2025) [2] Senator Chris Murphy’s Report, "The Buy, Strip, Flip Model: How Private Equity is Destroying Connecticut Hospitals" (2023) [3] The New York Times, "Prospect Medical Files for Bankruptcy" (2023) [4] The Boston Globe, "Steward Health Care Files for Bankruptcy" (2024) [5] The Wall Street Journal, "Steward Health Care's Troubled History" (2024)
- The financial collapse of major healthcare providers, such as Prospect Medical Holdings and Steward Health Care, has been a subject of concern in the news, with the Senate Budget Committee releasing a report titled "Private Equity and the Collapse of Prospect Medical Holdings" in 2025.
- The collapse of these providers, which occurred in 2023 (Prospect Medical) and 2024 (Steward Health Care), has led to disruptions in health-and-wellness services for affected communities, resulting in increased reliance on emergency services like 911.
- Investigations have shown that these companies' focus on finance and business strategies prioritized short-term investor returns, leading to medical-conditions and health-related issues due to hospital closures and the erosion of infrastructure.
- In some cases, private equity firms like Leonard Green & Partners and Cerberus Capital Management have been accused of fraudulent activities, with executives, such as Ralph de la Torre, facing allegations of embezzling millions from these companies.
- This phenomenon, known as the "buy, strip, flip model," has significant implications for the finance sector, with concerns raised about the long-term sustainability of businesses, particularly in the healthcare industry, when financial returns are prioritized over community well-being and business stability.
