STAT+: A private equity-owned hospital chain is becoming a nonprofit. Is it just a bailout for investors?

Quorum Health is a private equity-owned chain of mostly rural hospitals that filed for bankruptcy in 2020 after years of making hefty payments to its investors, and it is now back on the brink of insolvency. The nonprofit conversion is notable because individual private equity-owned hospitals have transitioned to nonprofit status before, but it is unheard of for an entire chain to do so. In Louisa, Kentucky — population less than 3,000 — Three Rivers Medical Center CEO Greg Kiser told the mayor and county judge that the hospital was not closing, prompting sighs of relief; one of the town's biggest employers, the hospital is seen as essential, with officials telling Kiser, "we can't make it without this hospital in our little town."

Quorum is in the process of converting to a nonprofit organization and bringing all 11 of its hospitals along with it. The change promises tax advantages, discounted drugs through the 340B program, and the ability to apply for grants. Most importantly, cash generated would go to patient care instead of private equity investors.

The STAT+ piece examines whether the conversion is a genuine nonprofit transition or simply a bailout for investors, given Quorum's private equity ownership, bankruptcy history, and renewed financial distress. The full article is paywalled after this setup.