In late August the release of a report by US senator Chris Murphy (D-Conn) on the destruction of hospitals in his home state of Connecticut, and across the US by private equity companies highlights once again the negative effect of this form of investment.
The report documented what happened when three Connecticut hospitals—Waterbury Hospital, Rockville General, and Manchester Memorial—were bought by Prospect Medical Holdings, a company that since 2010 had been owned by private equity firm Leonard Green & Partners.
Extensive employee testimony in the report told of how Prospect went to extreme lengths to avoid spending money, including delaying and stopping paying suppliers leading to a lack of equipment and disposables for treatment and surgery, and even a lack of food for patients, maintenance of buildings was neglected, which in two instances led to ceilings collapsing.
The deterioration of patient care at Waterbury became obvious by 2019, when the report noted that it “recorded the highest rates of patient readmission in the state.”
Things got even worse for the hospitals when Leonard Green & Partners decided to sell the land the hospitals were built on to a real estate investment firm. The firm then leased the land back to Prospect at high rates. When Leonard Green sold off its stake in Prospect the report said it left “nothing but debt and destruction” in its wake.
Prospect itself filed for bankruptcy earlier in 2025, and the fate of all three hospitals is now “in the hands of a bankruptcy judge in Texas,” the report added.
Not an isolated case
Murphy’s report also emphasized that the story of private equity “stripping hospitals for parts” is not unique to his state. In September 2024, the CEO of private equity-backed Steward Healthcare failed to testify to a Senate Health, Education, Labor, and Pensions (HELP) Committee on how the company had mismanaged a now bankrupt hospital system. The committee did, however, hear from nurses who told of how Steward’s management prioritised shareholder payouts and lavish executive compensation leaving the hospitals in dire straits, with insufficient staffing and resources.
Also in August 2025 a report by the Private Equity Stakeholder Project (PESP) in the USA, an organisation which monitors private equity investment, detailed the role played by private equity companies in the bankruptcy of Genesis Healthcare, once the largest skilled nursing operator in the USA. The company filed for Chapter 11 bankruptcy in July 2025, burdened with more than one billion dollars in debt. The report noted that “the company’s collapse caps years of financial deterioration shaped by a private equity strategy of asset stripping, high-risk borrowing, and recurring regulatory violations.”
Private equity is a global phenomenon
These reports are from the USA, but private equity’s interest in healthcare is global, including the UK.
A backgrounder on private equity – how it works and its involvement in public services in the UK – can be found on our NHSforsale site, but in short private equity is the very worst of capitalism. It has no long-term interest in companies, their employees, clients or the communities where they are based. Private equity operates only to make as much money as possible in as short a time as possible, usually 5-7 years. It burdens the companies it invests in with massive, usually unsustainable debt, and siphons off as much money for investors (and the private equity managers) in as short a time as possible.
In the USA, private equity investment has been shown to be a critical driver of instability. In particular, private equity’s use of leveraged buyouts, a strategy in which a private equity firm finances its acquisition of a company using debt secured by the company it is acquiring rather than using its capital or taking on the debt itself, means companies are saddled with substantial debt. As a result, resources that could otherwise be invested in the workforce, innovation, or adapting to market changes, go instead to servicing the debt, leaving the companies vulnerable to financial difficulties and bankruptcy.
The first public sector targets in the UK for private equity were social care and education due to the attraction of guaranteed incomes as councils tried to fulfill their statutory duties in the face of austerity measures cutting council-owned services. There is substantial evidence that private equity companies have made large profits, but at the expense of safety and quality of care.
The NHS is now a major target for PE
As successive government policies encouraged private company involvement in the NHS, private equity has sought involvement. In the NHS, mental health companies were an early target, but since the Covid pandemic it became clearer to private equity just how much money governments would throw to the private sector increasing the attractiveness of the market.
Investments have been made across the board in healthcare services, including GP services, ambulance services and staffing agencies.
Recent government policies for more care in the community, increased diagnostics, and the reduction of waiting lists have been noted by private equity and they have ramped up investment accordingly. To that end companies working in ophthalmology, dermatology, musculoskeletal services and diagnostics have all been targeted by private equity.
Eclipse Corporate Finance, a company that advises companies and private equity on acquisitions and mergers, noted in its 2024 review of healthcare M&A activity that “more than half of all transactions in 2024 involved private equity, either directly or indirectly.” In 2025, this activity has continued with Eclipse’s reviews of both quarter 1 and 2 noting that around 50% of M&A activity involved private equity.
In ophthalmology, the major growth area for private companies in the NHS, leading companies – CHEC (Community Health and Eyecare) and SpaMedica – are backed by private equity, as was Optegra until June 2025 when it was sold to EssilorLuxottica.
The companies have received millions each year from carrying out procedures (primarily straightforward cataract operations) for the NHS, much of which has gone in profit to investors and to pay off company debts, according to an analysis by the CHPI. In a government briefing in November 2024, however, concerns about the companies were reported of poor value for money, unnecessary operations, poor follow-ups and patient safety, and negative impacts on workforce and training. Fraud investigations are also now taking place.
Diagnostics is now an attractive sector for private equity, due to the push by governments over the last few years for expansion, including community diagnostic centres (CDCs), and the shortages of radiologists in the NHS.
Some of the leading companies in remote teleradiology with contracts with the NHS are owned by private equity, including Medica (owned by IK partners), Medical Imaging Partnership (Apposite), Diagnostic Healthcare (G Square), and Everlight Radiology (LivingBridge).
In community diagnostic work, Alliance Medical, a company heavily involved in running CDCs, is owned by private equity company iCON Infrastructure.
More recently private equity has been attracted to companies that provide community-based services as they anticipate more contracts from Integrated Care Boards (ICBs) trying to increase care in the community. The largest private company holding NHS contracts for community services, HCRG Care, is owned by Twenty20 Capital, a private equity company.
Notable recent private equity activity for companies that have NHS contracts includes the following:
- Private equity firm CBPE invested in HealthNet Homecare, one of the largest UK providers of clinical homecare services. The company works in partnership with the NHS and pharmaceutical companies to deliver clinical homecare, nursing administration and patient support services to over 165,000 patients with rare diseases and chronic health conditions.
- The merger of Connect Health, owned by LDC private equity, and Healthshare, owned by BGF private equity, to create Cora Health, a provider of physiotherapy, surgical and diagnostic services, which has major contracts with the NHS. Cora Health is now owned by LDC private equity.
- The 2025 expansion of PHL Group, backed by private equity company Ethos Partners, which first merged with Malling Health in March gaining numerous GP surgeries and then acquired the trading subsidiaries of Totally plc, including elective care, urgent care, and corporate wellbeing in June 2025. PHL Group now has a large portfolio of NHS contracts.
Can private equity involvement in the NHS be stopped?
For many years critics have warned that the way private equity firms do business is not aligned with the social values of care delivery and harms health systems and patients. In recent years governments globally have sought to limit or regulate the activity of private equity in healthcare. Even in the USA, states have begun to take action to try and limit private equity in healthcare.
In June 2025, a paper in Health Policy – What are the policy options for regulating private equity involvement in health care? A review of policies implemented or considered in seven high-income countries – identified examples of policy options for regulating private equity activity. Few options the researchers identified had actually been implemented, but those that had and those proposed included: disclosure, such as requiring notification to the government of companies existence or activity; regulation, including of quality of care, and prohibition of certain company types being involved in healthcare. The paper includes approaches in the USA, Canada, Finland, France, Germany, Ireland, and The Netherlands.
The paper did not consider the UK. Here despite considerable evidence of private equity’s negative effect on the care and education sectors and its interest in the healthcare sector, little has been done to prevent private equity siphoning off vast amounts of money from the NHS via healthcare companies with NHS contracts.
Labour pledged in its election manifesto to close the “loophole” involving private equity whereby carried interest – the cut of gains private equity investors make on successful deals – is treated as capital gains not income for tax purposes.
In April this year, Chancellor Rachel Reeves raised the tax rate on carried interest from 28% to 32%. The government is planning to treat carried interest as income for tax purposes, rather than capital gains, from April 2026.
The proposed new regime would have meant that fund managers would have carried interest taxed at an effective rate 34.1%, higher than before but still much lower than the 45% additional rate of income tax.
In June 2025, after consulting on the proposed regime, the Treasury said that the government would drop a proposal that would have made it more difficult for executives to qualify for the 34.1% rate and a proposal of co-investment, whereby executives would be required to place a minimum amount of their own cash in their funds.
The FT reported that these new concessions to private equity firms followed warnings the reform would damage British competitiveness.
Talking to the FT Dan Neidle, founder of the think-tank Tax Policy Associates, said the government concessions represented a “significant climbdown” by ministers, saying the industry’s “highly organised lobbying effort” had “got some big wins”.
He added that “the government has dropped the requirement for ‘co-investment’ means that people can continue to invest a nominal amount, receive a massive return, and achieve that discounted tax rate.”
So to date, little has been done to rein in the business practices of private equity companies and they will continue to target healthcare firms which in the UK inevitably this means firms that will either have or be interested in gaining contracts from the NHS. As ICBs desperately try to reduce costs by cutting services, the money they pay to companies owned by private equity will continue to go to service debt or leave the country.
The only sure way to keep private equity out of the NHS is to not award the contracts to private companies in the first place.
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