America's largest healthcare company has won some of the biggest names in the chopping block as the remaining economic headwinds fight.
As patients suffer from rising medical debt, access issues and the overall lack of affordable quality care, providers and other healthcare companies appear to be at the forefront of the same system that is often described as at stake.
Surge in filing
A recent report from Gibbins Advisors found that 79 healthcare bankruptcy filings in 2023 averaged over 42 per year in the past four years. Senior care and hospital bankruptcies skyrocketed past typical levels in the first quarter, but overall healthcare bankruptcies fell significantly over the three months leading up to July.
The tally of applications for 2025 has remained a worrying trend over the past few years, but this year it stands out because of the size of businesses not fulfilling their financial obligations.
S&P Global Market Intelligence has discovered that three healthcare companies with assets worth over $1 billion have applied for Chapter 11 protection this year.
LA-based Prospect Medical Holdings filed for bankruptcy in January and then seeks Chapter 11 protection in July to offload the majority of Lifescan Global, which offers glucose monitoring and diagnostic equipment, hopes to cut debt thanks to ongoing suppression efforts. as “legacy liabilities related to previously sold businesses.”
“We've seen a lot of people who have had a lot of trouble with their health care management,” said Lawton Robert Burns, professor of health care management at the University of Pennsylvania Wharton School.
Newsweek Illustration/Canba
Diagnosis of the health care struggle
Burns, who wrote the US Healthcare Ecosystem (2021, now second edition), told Newsweek that bankruptcies in the sector have been steadily rising since 2010.
“We've seen a lot of people who have had a lot of trouble with their health,” said Mark Pauly, a health economist at the University of Pennsylvania. “This highlights insurance companies, especially Medicare Advantage insurers, which are making high profits.”
Burns said the revenue crisis facing many American companies was the result of “many poor decisions over the long term,” but told Newsweek that it was also a factor other than control.
He said the “one biggest driver” in hospital revenue was the rise in labor costs.
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Recent data from Hebia, a financial and legal analytics website, found that the healthcare sector lags in the second quarter behind the wider economy, with healthcare companies cutting margins from 100 to 300 basis points compared to 2024.
Pauly focused on the limited supply of nurses and “low overall unemployment rate” as factors that have pushed up labor costs in recent years. Burns told Newsweek that the rush to recruit nurses during the community's pandemic has strengthened competition for wage-driven staff.
But beyond the specific issues that may contribute to financial tensions among healthcare companies, there is a thread that links the biggest bankruptcy of the year: private equity.
David Himmelstein, a physician and professor of public health and health policy at Cuny School of Public Health, said the three health bankruptcies cited by S&P Global involve private equity-owned or supporting companies.
“In these two cases, Genesis and prospects — bankruptcy appears to reflect a private equity strategy of liability burden while stripping assets to reward investors,” he told Newseek.
Lifescan told Newsweek: Instead, the company mentioned the court's filing cited several factors behind the decision, including a decline in the success of the Core Blood Glucose Surveillance Business, a prior restructuring effort that proved to have failed, and a desire to eliminate the $1.4 billion debt burden.
Newsweek reached out to Genesis and Prospect by email to comment on Friday.
“Bankruptcy is an important, full-fledged home that demonstrates the broader risks associated with private equity investments,” the Private Equity Stakeholder Project (PESP) told Newsweek.
“The increased risk of bankruptcy threatens worker safety, disrupts consumer services, and creates ripple effects across the local economy. The presence of private equity 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 US economy, has released a report that the collapse of Genesis “reflects a recurring pattern of financial vulnerabilities related to private equity ownership.”
“Genesis Healthcare's bankruptcy was a predictable outcome of a value-extracted financial strategy while reducing the resources to extract value and maintain care through debt and real estate transactions,” wrote Michael Fenne, Senior Research Coordinator at PESP.
Prognosis of American healthcare companies
“I don't think there's a big promise in the short term,” Burns told Newsweek.
“The healthcare sector is facing unprecedented levels of budgetary pressure,” said Adrian Seibtey, an economist and professor at Stanford School of Medicine. Sabety said these were exacerbated by the big beautiful bill laws that President Donald Trump signed in early July.
As far as effectiveness goes, Sabety believes that financial headwinds will continue to put pressure on organizations with already thin margins, such as nursing homes and senior residential facilities, and it is likely that companies across the sector will cut staff to those who will undermine patients as they try to avoid bankruptcy routes.
As financial pressures endure and bankruptcies spread across the industry, American healthcare companies face the same unsettling reality as many patients.
Updated 08/26/25 5:28 AM ET: This article has been updated with an answer from LifesCan Global.
