Rhode Island pushes oversight on private equity in health care. Other states should follow.

Rhode Island Attorney General Peter Neronha added new rules to the proposed sale of Roger Williams Medical Center and Our Lady of Fatima Hospital in an amended decision issued July 31. The sale — from private equity-backed Prospect Medical Holdings to the nonprofit Centurion Foundation — has been closely watched across the state. The updated terms reflect growing concern over the role of private equity in Rhode Island’s health care system. The new amendment includes several key conditions:

• $50 million in capital investments over the next three years
• Expanded monitoring and enforcement powers by the Attorney General’s office
• Authority to appoint a receiver if financial instability emerges
• Additional reporting and accountability requirements

The stakes are high. Both Roger Williams and Fatima serve as safety net hospitals for some of Rhode Island’s most underserved communities. Their former operator, Prospect Medical Holdings, has come under intense scrutiny — not just in Rhode Island, but nationwide — for the financial strain imposed on the hospitals it acquired. The company, backed by private equity, filed for bankruptcy in early 2025 while carrying about $6 billion in debt. At the same time, its investors reportedly extracted over $600 million in dividends, leaving hospitals with decaying infrastructure and unpaid vendors.

Save now, pay later: Roger Williams and Fatima hospital buyer faces ballooning debt service

Over the past decade, private equity firms have quietly acquired thousands of hospitals, nursing homes, and physician practices across the United States. The number of physician practices alone grew from 800 in 2012 to over 5,700 by 2021, according to UC Berkeley research.

Private equity operates with a distinctive model: acquire health care providers using debt, aggressively cut costs to boost profit margins, and exit the investment within a few years. That often means slashing staff, squeezing billing codes, and “optimizing” services — at a cost to patients.

The results are troubling. Researchers found that nursing homes owned by private equity  entities had a 10% increase in the short-term death rate of Medicare patients over a 12-year period — it means more than 20,000 additional deaths. The full study was published by the National Bureau of Economic Research (NBER).

Another peer-reviewed study, published in JAMA, analyzed more than 4 million hospital stays and found that Medicare beneficiaries at private equity-owned hospitals experienced a 25% increase in hospital-acquired adverse events, including a 27% increase in falls and a 38% increase in bloodstream infections.

A researcher from Brown University analyzed over 226 million prices and found that private equity–affiliated primary care providers charged 7.8% more for the same office visits compared to independent practices. Hospital-affiliated primary care providers charged 10.7% more.

While private equity ownership of hospitals in Rhode Island remains low, the situation with nursing homes needs attention. According to the Private Equity Risk Index, 13.3% of nursing homes in the state are now private equity-controlled. This places Rhode Island among the top 10 states nationally for private equity penetration in elder care. The report notes that these facilities have an average Medicare quality rating of 2.5 (on a 1-5 scale) and an average of 5.5 substantiated complaints per facility between 2019 and 2022 — both worse than industry norms.

With Neronha’s latest decision, Rhode Island is pushing back — and setting a national example. The July 31 amendments mark a pivot away from private equity in health services and toward nonprofit governance. The updated conditions not only make the Centurion deal viable, but also ensure safeguards are in place to avoid another Prospect-style collapse.

Still, systemic questions remain. Should private equity be allowed to control critical health care infrastructure? What protections do patients have when ownership changes hands?

Private equity can bring capital, yes — but without public accountability, there’s no clear line between investment that heals and investment that harms.