Owning a REIT comes with a higher risk of hospital bankruptcy and closure

Owning a REIT comes with a higher risk of hospital bankruptcy and closure

U.S. hospitals that were acquired by a real estate investment trust (REIT) were at a higher risk of bankruptcy or closure than hospitals that were not acquired by a REIT, according to a new study by researchers at the Harvard TH Chan School of Public Health. The results also showed that REIT acquisition of hospitals had no significant impact on quality of care or clinical outcomes.

The study will be published on Thursday, December 18, 2025the BMJ.

When a hospital sells its real estate to a REIT, the REIT then acts as the landlord and the hospital acts as the tenant. This practice is becoming increasingly common among private equity and corporate-owned hospitals in the United States. Proponents argue that profits from selling a hospital's real estate to a REIT can be used to improve clinical care. But concerns are growing that for-profit hospital owners are using REITs as a strategy to remove assets from hospitals to generate returns for investors.

While previous studies have examined the consequences of private equity and corporate ownership of hospitals, none have evaluated the consequences of REIT acquisitions of hospitals specifically. For this study, researchers compared the clinical and financial outcomes of 87 hospitals acquired by REITs between 2005 and 2019 with 337 hospitals that were not acquired by REITs. They assessed a variety of data, including Medicare claims, financial performance, patient experiences in hospitals, hospital staffing levels, and clinical outcomes and quality, as indicated by 30-day mortality and readmission rates for patients with heart attack, heart failure and pneumonia.

The results showed that the REIT acquisition had no significant impact on the quality of clinical care or patient outcomes, but did have a significant negative impact on a hospital's finances. Hospitals acquired by a REIT had a 5.7 times higher risk of closure or bankruptcy compared to hospitals not acquired by a REIT.

There appears to be no systematic reinvestment in clinical services in REIT-acquired hospitals, which is one of the arguments used by private equity firms or hospital corporate owners as to why a REIT transaction could be beneficial. Instead, we see that these hospitals are less likely to survive. As more and more funding goes away, it’s death by a thousand cuts.”

Thomas Tsai, corresponding author, associate professor in the Department of Health Policy and Management, co-director of the Healthcare Quality and Outcomes Lab, and surgeon at Brigham and Women's Hospital

The researchers say the findings underscore the need for greater oversight of REIT acquisitions of hospital properties.

“The REIT takeover of hospitals has the potential to help or seriously harm hospitals and the communities they serve,” Tsai said. “The real-world evidence generated by our study can inform federal and state regulatory efforts to more closely monitor hospital ownership and transactions to ensure patients and communities are not harmed.”

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