Bankruptcies across the healthcare sector continue to raise concerns about the stability of various care delivery and service models.
Here are five recent bankruptcies and how they illustrate larger structural and financial challenges impacting the industry:
1. CareMax
In November 2024, Miami-based CareMax, a senior-focused healthcare provider, filed for Chapter 11 bankruptcy and announced plans to sell its management services organization and clinic assets. Under a pre-arranged restructuring plan supported by its secured lenders, CareMax entered into agreements to sell its MSO to Revere Medical (formerly Rural Health Group) and its operating clinics to ClareMedica Viking in a deal valued at $100 million.
The company’s 2022 acquisition of Steward Health Care’s Medicare value-based care business expanded its footprint significantly, granting it exclusive MSO rights for 171,000 patients. However, Steward’s own bankruptcy filing in May 2024 exacerbated CareMax’s financial instability, contributing to its collapse and prompting a reevaluation of its earlier expansion strategy.
CareMax’s Chapter 11 filing resulted in the complete cancellation of its existing equity, leaving shareholders with no returns. Founded in 2011, the company initially aimed to serve underserved populations and saw rapid growth in Florida. Its 2021 public merger generated $614 million in capital, fueling an aggressive expansion, including a partnership with Anthem to open 50 new centers.
2. NES Health
In February 2024, physician staffing firm NES Health filed for Chapter 7 bankruptcy and ceased operations following prolonged financial struggles. The filing listed assets between $1 million and $10 million and liabilities from $10 million to $50 million. Hundreds of creditors, including hospitals and contract physicians, were affected — many reporting unpaid wages for emergency department work.
The physician staffing industry is facing widespread disruption, with multiple large firms closing or declaring bankruptcy in the last two years. This trend reflects deeper challenges: changing hospital staffing needs, financial constraints and the aftermath of COVID-19, which caused a sharp decline in emergency department visits.
Historically, emergency physicians operated as independent contractor groups. That model shifted in recent years as private equity firms consolidated these groups into larger staffing entities. During the pandemic, reduced ER volumes and declining revenues destabilized these firms. Post-pandemic, hospitals have increasingly opted for more cost-efficient staffing strategies, such as direct hires or gig-style models using travel staff and independent contractors.
3. Prospect Medical Holdings
In January 2024, Los Angeles-based Prospect Medical Holdings filed for Chapter 11 bankruptcy, citing over $400 million in debt. Despite the filing, the private equity-backed system, which operates hospitals in California, Pennsylvania, Rhode Island and Connecticut, stated that normal operations would continue.
One of its subsidiaries, Upland, Pa.-based Crozer Health, soon announced a complete shutdown, with more than 2,600 employees laid off. After months of court proceedings and failed sale attempts, the health system said it had exhausted all options. The closure announcement came shortly after the resignation of Crozer Health CEO Tony Esposito, who had led the organization since 2022.
Prospect’s struggles highlight the growing pressures on for-profit hospital systems, especially those operating under private equity ownership models.
4. Rite Aid
In May 2025, Rite Aid filed for Chapter 11 bankruptcy for the second time in under two years, stating plans to sell “substantially all” of its assets. CEO Matt Schroeder cited intensifying financial difficulties and rapid shifts in the retail and healthcare environments as driving factors.
The company previously filed for bankruptcy in October 2023 and emerged in September 2024 following a major restructuring and debt reduction. Despite these efforts, Rite Aid continues to grapple with systemic challenges facing retail pharmacy chains.
Pharmacy closures are rising across the U.S., reversing a decades-long trend of expansion. Mergers between large chains and pharmacy benefit managers have consolidated patient flows into select pharmacy networks, reducing demand for independent and traditional retail locations.
Read more about what retail pharmacy closures mean for healthcare here.
5. Steward Health Care
Dallas-based Steward Health Care,filed for bankruptcy in May 2024 after a rapid unraveling of its operations. Once operating 31 hospitals in eight states, Steward faced over $9 billion in liabilities, nearly $1 billion in unpaid bills and $6.6 billion in long-term lease obligations to its landlord, Medical Properties Trust.
Since the filing, five hospitals have permanently closed, and several others have temporarily suspended services. Many facilities have been transferred to new investor owners, a shift raising concerns over the sustainability and oversight of private equity-backed healthcare systems.
A report by the Private Equity Stakeholder Project criticized the post-bankruptcy handling of Steward’s facilities, warning that the transition has done little to ensure long-term stability or protect community access to care. According to the report, hospitals that avoided closure were simply transferred between investor-owned entities with minimal regulatory oversight.
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