Private Equity’s Hospital Count Jumps to 561 as Massachusetts Reviews Select Medical’s Buyout After the Fact

Private equity’s footprint in American hospitals grew sharply over the summer, and one of the deals behind that growth is now drawing a belated look from Massachusetts regulators. An updated tracker from the Private Equity Stakeholder Project (PESP), a watchdog group critical of the industry, counts 561 U.S. hospitals owned by private equity firms, up from 447 in its July dataset, HIT Consultant reported on Oct. 30.

Separately, Select Medical Holdings filed a notice of material change with the Massachusetts Health Policy Commission (HPC) on Oct. 15, describing a take-private transaction that closed on July 1. State law requires such notices at least 60 days before a deal closes.

The numbers

According to HIT Consultant’s account of the October update, private equity firms now own about 11.9 percent of U.S. private hospitals, up from 9.5 percent in July, and about 33.6 percent of proprietary for-profit hospitals, up from 26.8 percent. PESP’s July report, published on its website, confirms the starting point: roughly 447 PE-owned hospitals, or 9.5 percent of 4,713 private hospitals and 26.8 percent of 1,667 for-profit facilities.

• 561 PE-owned hospitals in the October update, a net gain of 114 since July.
• 124 hospitals overseen by Welsh, Carson, Anderson & Stowe (WCAS), now the second-largest PE hospital owner, per HIT Consultant.
• At least 144 PE-owned hospitals whose real estate has been sold to real estate investment trusts and leased back, up from at least 136 in July.
• About 23 percent of PE-owned hospitals operate through joint ventures with nonprofit health systems.

PESP executive director Jim Baker put the group’s view bluntly: “Anyone who thinks private equity is done buying hospitals should think again,” according to HIT Consultant. In its July report, PESP identified Apollo Global Management, through Lifepoint Health and ScionHealth, as the largest owner, with at least 203 locations. The October figures have been reported through HIT Consultant; Paxton-Digital has not independently reviewed PESP’s updated dataset.

The Select Medical filing

Select Medical, based in Mechanicsburg, Pennsylvania, reported 103 critical illness recovery hospitals, 41 rehabilitation hospitals and 1,912 outpatient rehabilitation clinics as of March 31, according to Becker’s Hospital Review. A consortium of co-founder Robert Ortenzio, Martin Jackson and WCAS took the company private in a deal valued at about $3.9 billion, according to Becker’s and HIT Consultant. Select stopped trading on the New York Stock Exchange on July 1.

The HPC filing, posted on the commission’s website, says an entity called Stallion Intermediate Corporation acquired all Select shares the consortium did not already own, leaving the company privately held. In Massachusetts, the affected sites are outpatient physical therapy clinics, not hospitals: two S.T.A.R.T. locations, six Physiotherapy Associates locations and 11 D.G. Physical Therapy locations, for 19 in all. The filing states the deal did not change clinic-level operations, services or clinical decision-making, and it lists July 1, 2026, as the effective date.

HIT Consultant reported that PESP raised the transaction with the HPC in August, after which the commission contacted Select and determined a filing was required. The filing itself gives no reason for its timing, and the HPC has not announced any conditions or remedies. The review remains open.

Paxton-Digital’s Take

Paxton-Digital reads the two stories as one trend seen from two altitudes. At the national level, private equity is not leaving hospitals; it is changing which hospitals it buys. HIT Consultant described a shift away from distressed rural and safety-net acute care toward specialized post-acute assets, such as critical illness recovery and inpatient rehabilitation hospitals. Select Medical, with its long-term acute care and rehabilitation portfolio, fits that profile closely, and the tracker’s jump in WCAS-controlled hospitals coincides with the deal’s July closing.

At the state level, the Select filing shows how pre-transaction review laws work in practice when a national deal touches a state only lightly. A take-private of a public company with 19 outpatient clinics in Massachusetts is a small part of a much larger transaction, but the HPC’s position, as reported, is that the notice requirement applies anyway. Deal teams should take that seriously. HIT Consultant noted that California, Massachusetts, New York and Minnesota all run pre-transaction review panels that can add four to six months to a closing beyond the standard federal antitrust waiting period. For buyers of multistate provider platforms, mapping every state’s notice rules early is now part of the cost of doing a deal, and filing late creates avoidable regulatory attention even when the local footprint is modest.

What it means for you

• Patients at Massachusetts Select-affiliated PT clinics should see no immediate change; the filing says clinic operations and clinical decisions were unaffected.
• Health system boards weighing joint ventures or sale-leasebacks should expect more scrutiny of PE capital structures in the next legislative cycle.
• Deal advisers should build state notice timelines into closing schedules for any transaction touching Massachusetts providers.
• Investors should watch how the HPC resolves the Select review as a signal for future enforcement of late filings.

Discussion

1. Should a state be able to review a national take-private deal when its local footprint is a handful of outpatient clinics?
2. Is private equity’s shift toward post-acute hospitals good or bad for patients who need long-term recovery care?
3. Should states limit sale-leaseback arrangements for hospitals that serve as essential community providers?