America’s largest health care companies are in dire financial straits, with some of the biggest names on the chopping block as the remainder battle economic headwinds.
As patients struggle with rising medical debt, access issues and an overall lack of affordable, quality care, providers and other health care companies appear to be falling victim to the same system often described as being in crisis.
Surge In Filings
According to a recent report from Gibbins Advisors, the 79 health care bankruptcy filings in 2023 and 57 in 2024 surpassed the annual average of 42 for the previous four years. While senior care and hospital bankruptcies surged past typical levels in the first quarter, overall health care bankruptcies dropped markedly in the three months through July.
While the tally of filings in 2025 has remained on the worrying trend of the last few years, this year has stood out because of the scale of the companies failing to meet their financial obligations.
S&P Global Market Intelligence found that three health care companies with assets of more than $1 billion have filed for Chapter 11 protection this year:
- L.A.-based Prospect Medical Holdings filed for bankruptcy in January and has since been attempting to offload the majority of its hospitals.
- LifeScan Global, which provides glucose-monitoring and diagnostic equipment, sought Chapter 11 protection in July and hopes to reduce more than three-quarters of its debt thanks to ongoing restructuring efforts.
- Genesis HealthCare, a leading provider of post-acute and long-term care services, also filed in July to address what it described as “legacy liabilities associated with previously divested operations.”
“There’s a lot of wreckage out there along the highway of healthcare,” said Lawton Robert Burns, professor of health care management at the University of Pennsylvania’s Wharton School.
Diagnosing Health Care’s Struggles
Burns, who authored The U.S. Healthcare Ecosystem (2021, now in its second edition), told Newsweek that bankruptcies in the sector have been steadily rising since 2010. He said the most accurate causal diagnosis one can provide—given the diverse nature of the industry and the companies that fall under the “health care” umbrella—is the growing “delta” between revenue and expenses.
“Medical care spending [started] to accelerate in 2024 after growing at around the same rate as GDP for a decade,” said Mark Pauly, a health economist at the University of Pennsylvania. “This has stressed insurers, especially Medicare Advantage insurers which were making high profits.”
Burns told Newsweek that the revenue crisis facing many American firms was a result of their own mistakes—”a lot of poor decision making over a long period of time”—but also factors outside of their control.
“The single biggest driver” in the case of hospital revenues, he said, was rising labor costs.
Recent data from financial and legal analytics website Hebbia found that the health care sector lagged behind the wider economy in the second quarter and that margins among health care firms have shrunk between 100 and 300 basis points compared to 2024. In the case of providers, Hebbia attributed it to “labor cost inflation.”
Pauly noted the limited supply of nurses and the “low overall unemployment rate” as factors that pushed up labor costs in recent years. Burns told Newsweek that the rush to recruit nurses during the COVID pandemic intensified competition for staff that drove up wages—an effect amplified by a surge in nursing practitioners who function as mid-level providers and command much higher wages.
But beyond the specific issues that may be contributing to financial strain among health care companies, there is a thread that ties this year’s largest bankruptcies together: private equity.
David Himmelstein, a physician and professor of public health and health policy at the CUNY School of Public Health, said that the three health care bankruptcies cited by S&P Global involve private equity-owned or -backed firms.
“In two of those cases—Genesis and Prospect—it appears that the bankruptcy reflects the private equity strategy of loading acquisitions with debt while stripping them of assets in order to reward investors,” he told Newsweek.
Newsweek contacted the companies via email on Friday for comment.
“Bankruptcies are a key bellwether signaling the broader risks associated with private equity investments,” the Private Equity Stakeholder Project (PESP) told Newsweek. “The heightened risk of bankruptcy threatens job security for workers, disrupts services for consumers, and creates ripple effects across local economies. Private equity’s growing presence raises questions about the sustainability of this financial model and its long-term impact on the broader economy.”
PESP, a nonprofit watchdog that monitors the impact of private equity across the U.S. economy, recently published a report that said the collapse of Genesis “reflects a recurring pattern of financial fragility tied to private equity ownership.”
“Genesis Healthcare’s bankruptcy was a predictable result of a financial strategy that extracted value through debt and real estate transactions while leaving the company with fewer resources to sustain care,” wrote Michael Fenne, PESP’s senior research coordinator.
Prognosis For America’s Health Care Companies
“I don’t think the near term holds greater promise,” Burns told Newsweek, when asked whether there was any reason to be optimistic about the financial future of the sector.
“The health care sector is faced with unprecedented levels of budgetary pressure,” said Adrienne Sabety, economist and professor at Stanford University‘s School of Medicine. Sabety said these had been exacerbated by the One, Big Beautiful Bill Act signed by President Donald Trump in early July that is projected to strip hundreds of billions in funding from Medicaid and Medicare over the next decade.
As far as the effects go, Sabety believes financial headwinds will continue to put pressure on organizations with already-thin margins such as nursing homes and senior living facilities, and that companies sector-wide will likely cut staff to the detriment of patients as they attempt to avoid going down the bankruptcy route.
As financial pressures endure and bankruptcies spread through the industry, America’s health care firms face the same uneasy reality as many of their patients: a system under strain with only costly cures in sight.
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