A new case study from the Georgetown University Center on Health Insurance Reforms in Washington, D.C., claims private equity firm Leonard Green & Partners and its then-hospital chain Los Angeles-based Prospect Medical Holdings extracted hundreds of millions of dollars from safety-net hospitals in Pennsylvania, Connecticut and Rhode Island prior to Prospect seeking Chapter 11 protection in January 2025.
Leonard Green & Partners acquired 66% of Prospect for $363 million in 2010 but sold its majority ownership for $12 million back to the company in 2021, the report said.
Here are six things to know:
- According to the report, LGP collected $658 million in dividends and fees through financial arrangements during the firm’s ownership. This included a $457 million payout to LGP and two top executives, which was funded by a $1.2 billion loan while the hospitals held less cash on hand and higher interest payments. Prospect’s CEO, Sam Lee, and a senior executive also made $128 million and $94 million, respectively.
- The report focused on the “private equity playbook,” from debt loading, sale-leasebacks and dividend recapitalizations, which can strip hospital assets. For example, a 2019 sale-leaseback deal with Medical Properties Trust totaled $1.55 billion for 14 hospitals and two psychiatric facilities. The deal left a $100 million yearly lease payment for Upland, Pa.-based Crozer Health’s hospitals and contributed more than $200 million in mortgage debt for Crozer facilities, the report said.
- In 2016, Prospect acquired Crozer and promised $200 million in capital investment over five years and a 10-year commitment to keep the system open. Instead, the system was forced to close and sell its Springfield (Pa.) Hospital, Drexel Hill-based Delaware County Memorial Hospital, Ridley Park, Pa.-based Taylor Hospital and Crozer-Chester Medical Center in Upland. Newark, Del.-based ChristianaCare then acquired five outpatient locations from Crozer in May 2025 for $50.3 million.
- Connecticut and Rhode Island hospitals also faced challenges. Prospect shuttered nearly all inpatient beds at Vernon, Conn.-based Rockville General Hospital and accumulated more than $67 million in unpaid state provider taxes. In Rhode Island, more than $24 million from Prospect’s CharterCare was past due to more than 800 vendors, which prompted more than 250 vendors to demand cash on delivery, the report said. The financial neglect led to canceled surgeries, hazardous conditions, staffing challenges and safety violations, according to the report.
- Prospect grew a profitable outpatient facility-fee business as inpatient care crumbled. Crozer’s five outpatient clinics posted operating margins as high as 57% in 2021, even as the system collapsed. Waterbury (Conn.) Hospital’s facility-fee revenue grew to nearly $15 million by 2024 despite a 42% drop in visit volume with facility fee charges, the report said.
- Farmington, Conn.-based UConn Health acquired Waterbury Hospital in March, and Rhode Island approved $18 million in state funding to help the nonprofit Centurion Foundation complete its purchase of Prospect’s Providence, R.I.-based Roger Williams Medical Center and North Providence, R.I.-based Our Lady of Fatima Hospital in March 2026.
Becker’s has reached out to Leonard Green & Partners for comment and will update this story should more information become available.
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