Prospect Medical Holdings Files for Bankruptcy After Years of Financial Strain

The hospital chain's collapse follows allegations of private equity mismanagement, mounting debt, and deteriorating care standards.

Prospect Medical Holdings, which operates 16 hospitals and 182 clinics, filed for Chapter 11 bankruptcy in Texas, citing debts between $1 billion and $10 billion.
The company attributes its financial distress to pandemic-related challenges, inflation, rising interest costs, and increased health plan denials.
A Senate report and lawsuits in multiple states allege mismanagement by former private equity owner Leonard Green & Partners, which extracted hundreds of millions in dividends and fees.
The bankruptcy plan includes selling two Rhode Island hospitals to the Centurion Foundation and divesting from the Crozer-Chester Medical Center in Pennsylvania.
Despite the filing, Prospect has pledged to maintain uninterrupted patient care across its facilities while securing $100 million in financing to sustain operations.