Major U.S. Healthcare Companies File for Bankruptcy Amid Rising Costs and Economic Pressure

The U.S. healthcare sector is facing a growing financial crisis. According to Newsweek, some of the country’s largest healthcare companies have filed for bankruptcy in 2025, signaling severe stress in an already strained industry.

A report by Gibbins Advisors reveals that 79 healthcare-related firms filed for bankruptcy in 2023 and 57 in 2024 — both well above the pre-pandemic average of 42 per year. In 2025, the trend continues, with the year marked by a surge in bankruptcies from billion-dollar firms.

According to S&P Global Market Intelligence, major players such as Prospect Medical Holdings, glucose-monitoring brand LifeScan Global, and long-term care provider Genesis Healthcare have all filed for Chapter 11 bankruptcy protection this year.

“These are not isolated incidents,” said Lawton Robert Burns, a healthcare management professor at the University of Pennsylvania’s Wharton School. “There’s a trail of wreckage along the road of healthcare consolidation.”

Burns attributes much of the turmoil to a growing mismatch between revenue and operating costs. He emphasized that many hospitals and care providers are grappling with sharply rising labor costs, especially for nurses and skilled technicians.

Economist Mark Pauly also pointed out that medical spending began to surge in 2024, deviating from its previous growth path that closely followed GDP. This has created pressure on insurance providers, particularly those offering Medicare Advantage plans that previously enjoyed high profit margins.

Private equity ownership appears to be a common thread among this year’s bankruptcies. All three major healthcare companies listed by S&P as filing for bankruptcy in 2025 had ties to private equity investors.

AiF Insight:
AiF reminds: The healthcare industry is undergoing massive restructuring. Now is not the time to invest in medical sector opportunities without caution.