A recent study published in the BMJ has shed light on the impact of real estate investment trusts (REITs) on the stability of hospitals. The study found that hospitals acquired by REITs were 5.7 times more likely to close or go bankrupt compared to their non-acquired counterparts. This finding has significant implications for the healthcare industry, especially in light of the recent collapse of Steward Health Care, a private equity-backed hospital chain that sold its properties to a REIT eight years before its demise.
According to the study, one-quarter of the hospitals acquired by REITs either closed or filed for bankruptcy within four years of the acquisition, compared to only 4% of non-acquired hospitals. This stark difference underscores the potential risks associated with REIT ownership in the healthcare sector. Despite the relatively low number of hospitals owned by REITs in the US (3% in 2021), the study highlights the need for further research and attention from policymakers.
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 importance of understanding the implications of REIT ownership in healthcare. The study’s findings suggest that REIT-acquired hospitals may be more vulnerable to financial difficulties and operational challenges, ultimately putting their long-term viability at risk.
The study’s findings have significant implications for the healthcare industry, as hospitals continue to face financial pressures and uncertainty. As policymakers and healthcare leaders navigate the complex landscape of hospital ownership and financing, the role of REITs in the industry will undoubtedly be a topic of ongoing debate and discussion.
In conclusion, the study’s findings underscore the need for further research and scrutiny of REIT ownership in the healthcare sector. By understanding the potential risks and challenges associated with REIT-acquired hospitals, stakeholders can work towards ensuring the long-term stability and viability of healthcare institutions.
