The Journal. — “Private Equity Took Over a Hospital. Then It Shuttered.”
Release Date: September 4, 2025
Hosts: Jessica Mendoza & Ryan Knutson
Podcast by: The Wall Street Journal & Spotify Studios
Episode Overview
This episode investigates the collapse of Chester, Pennsylvania’s last hospital after years under private equity ownership. Through interviews with local emergency workers, journalists, and community members, the hosts explore how private equity’s business model—focused on profit extraction—can devastate vulnerable communities. Special emphasis is placed on the real-life consequences for Chester’s residents, now left facing a critical healthcare shortage, unemployment, and higher taxes.
Key Discussion Points and Insights
1. The State of Chester Before the Hospital Closure
[01:08–02:01]
- Chester, PA, is already deeply disadvantaged: 50% of its population lives at or below the poverty line, and ~38% depend on Medicaid.
- Quote:
- Shane Wheeler: “The disease rate there is insane. You know, it's just, it's a rough, it's a really, really bad place with regards to health care.” (01:22)
- The closure of the last hospital has worsened access to care, eliminating not only emergency services but also all primary and preventative care.
2. The Private Equity Acquisition and Its Methods
[04:03–05:21]
- In 2016, Prospect Medical Holdings (owned by Leonard Green and Partners, a private equity firm) bought Chester’s hospital and others, promising stabilization and investment.
- Quote:
- Soma Biswas: “They saw the opportunity to buy some hospitals in certain areas…these were nonprofit hospitals that were not doing well, and they promised to make investments.” (04:45)
- Prospect borrowed heavily to build a hospital chain, ultimately making it easier for the PE firm to extract dividends.
Extracting Profits Over Care
- From 2012–2018, Leonard Green’s shareholders made $654 million through dividends and share sales, while the hospitals themselves became increasingly insolvent.
- Severe neglect: basic upkeep suffered (mold infestation, unpaid providers). To raise quick cash, the land under the hospital was sold to a real estate company—leading to long-term, high-cost leases for the hospital itself.
3. Downward Spiral: Debt, Dividends, and Bankruptcy
[06:41–08:52]
- Facilities became locked in expensive leases. Leonard Green sold its controlling stake in 2021, claiming that COVID-19’s shutdown of elective procedures, not their management, was the cause of the ensuing financial crisis.
- Court records show continuing unpaid bills and pension contributions.
- By 2024, the Pennsylvania Attorney General sued Prospect over hospital conditions.
- January 2025: Prospect filed for bankruptcy. No buyers could be found for Chester’s hospital.
Community Costs
- Local governments inherited millions in unpaid taxes, forcing property tax hikes for homeowners and businesses.
- Quote:
- Soma Biswas: “Prospect Medical holdings, they owe the county…$20 million.…the county and one particular school district had to raise taxes on all property owners.…It was particularly sharp increase for one of the school districts in the county.” (08:52)
4. The Fallout: Health Emergency for Chester
[10:13–12:29]
- All health infrastructure collapsed:
- Emergency departments in nearby cities flooded with new patients.
- Affiliated doctors’ offices shut down.
- Wait times for routine care stretched to a year or more.
- Quote:
- Shane Wheeler: “I did not have Chester City on our bingo card.…there was this gap with Prospect holdings bankruptcy, and they needed to care and we wanted to.” (11:00)
- Quote:
- Jessica Mendoza: “Wow.” — Reacting to one-year primary care wait (12:02)
Emergency Services Under Strain
- 45% of VSMC EMS responses do not lead to transports, meaning they’re providing uncompensated care:
- Quote:
- Shane Wheeler: “Over 45% of our responses are resulting in no transports, which means it’s uncompensated care…very few insurances will pay for treatment in place.…if we don’t load the patient and transport them, we don’t get compensated.” (13:10)
- Quote:
- Paramedics now field basic health questions—they are not trained for chronic, primary-care situations.
- Quote:
- Shane Wheeler: “We're not physicians.…We stop the bleeding, you know, we start the heart again, we breathe for the patient kind of things.” (12:29)
- Quote:
5. Policy Response and Ongoing Uncertainty
[13:54–15:06]
- State intervention: Pennsylvania is proposing new laws for added scrutiny on private equity healthcare investments; hospitals could only be acquired if a community impact review allows.
- Soma Biswas: “Governor Shapiro had made a big effort to pass a law that would make it harder for private equity firms to buy hospitals…” (14:06)
- No immediate solution for Chester:
- Quote:
- Shane Wheeler: “Yeah, we’re worried. Everybody’s worried. I think our staff is worried. I think the community is worried. Right. They were just let down by a health system. Right. And you know that the unthinkable happened. So, yeah, we’re worried.…But you know, there’s a lot of things on the…that are threatening that.” (15:06)
- Quote:
Notable Quotes & Memorable Moments
- “The disease rate there is insane. You know, it's just, it's a rough, it's a really, really bad place with regards to health care.”
— Shane Wheeler (01:22) - “Between 2012 and 2018, Leonard Green’s shareholders made $654 million in dividends and share sales from hospitals under Prospect Medical. But none of that money was making it to the hospitals themselves.”
— Jessica Mendoza (05:21) - “All these non emergency calls also means the team gets tied up and it makes it harder to respond quickly to actual emergencies.”
— Jessica Mendoza (12:53) - “What do you need to keep this going? Are you in any way worried that you won't be able to continue to provide the services that you provide? Is this going to stretch you too thin?...Yeah, we’re worried. Everybody’s worried…”
— Jessica Mendoza & Shane Wheeler (15:06)
Key Timestamps
- 01:08 — Chester’s economic and health challenges, with insights from Shane Wheeler
- 02:01–02:29 — Introduction of the private equity story
- 04:03–05:21 — How Prospect Medical Holdings assembled and managed the hospital chain
- 05:21–06:41 — Dividends extraction, facility neglect, and real estate sale
- 07:10–08:17 — PE exit, the pandemic’s impact, and the path to bankruptcy
- 08:52–09:25 — Unpaid taxes and community tax hikes
- 10:13–13:38 — Aftermath for healthcare, EMS overload, financial strain on emergency services
- 13:54–14:43 — State response: pushing for stronger oversight on future PE deals
- 15:06 — “Yeah, we’re worried…”, the uncertainty facing Chester
Tone and Style
The episode is sober, factual, and driven by real-life voices—delivering a sense of urgency and empathy for Chester’s residents and healthcare workers. The reporting leans heavily on first-hand testimonies and straightforward discussion of financial maneuvers, highlighting both systemic failure and its human consequences.
Summary:
This episode of The Journal illustrates how private equity’s profit-focused approach to healthcare can decimate community hospital systems, leaving vulnerable communities without basic medical services and burdened with new debts. Through personal stories and investigative reporting, it calls attention to the need for regulatory scrutiny and reforms.