A new paper in The BMJ from researchers at the University of Chicago and Harvard University is among the first to examine what happens when hospitals sell their buildings to Real Estate Investment Trusts (REITs) and lease them back.
The researchers previously documented how roughly 20 REITs have quietly accumulated a large share of U.S. health care real estate. Globally, REITs, often in partnership with private equity , have been buying medical office buildings, nursing homes, and hospitals. Some experts are raising the alarm that these financial entities have become major, lightly regulated landlords within the health system, extracting control over a critical asset: real estate.
"Most people have never heard of a REIT, although coincidentally many of us invest in them," said first author Joseph Dov Bruch, PhD , Assistant Professor of Public Health Sciences at UChicago. "However, real estate can be one of the most important assets that health care organizations have, so it's important to study the impact of these sale-leasebacks."
The new analysis examined what actually happens after hospitals sell their real estate to REITs. The transaction is marketed as an upfront infusion of cash that hospitals can use to hire staff, upgrade equipment, or expand services.
"The concern is that the proceeds are not used in a manner that benefits patients or the financial security of the health care organization, such as when proceeds are redirected toward private equity owners," Bruch said.
To understand these transactions' effects, the team examined 87 hospitals acquired by REITs and compared them with 337 similar hospitals that did not sell their real estate. They reviewed nearly 20 years of Medicare cost reports and clinical data including staffing levels, financial performance, patient satisfaction, and mortality and readmission rates for major conditions.
Bruch and his colleagues found no immediate improvements in hospitals' finances or quality, and importantly, no short-term harms either. But looking further out, hospitals that sold their buildings to REITs were more than five times as likely to close or file for bankruptcy as similar hospitals that kept their real estate. One in four REIT-acquired hospitals ended up closing or declaring bankruptcy in the analyzed time period, compared with just 4% of controls.
"I thought we might see a clearer change in financials immediately following a REIT acquisition," Bruch said. "We did not observe this among REIT-acquired hospitals, suggesting that the financial implications that lead to bankruptcy or closure may take longer to observe than a couple of years after the acquisition."
When hospitals enter bankruptcy, consequences can range from liquidating assets to reorganizing and eliminating service lines. As a result, communities can lose essential services and patients may be forced to travel farther for care.
Bruch and his colleagues say more research is needed to understand the bigger picture of REITs' effect on healthcare delivery, but that these initial results already highlight a need for regulatory oversight of REIT hospital acquisitions. They urge state and federal policymakers to improve reporting standards and scrutinize sale-leaseback contracts more closely to ensure the terms are reasonable and will not financially imperil the hospital, ascertain where the proceeds from these transactions will go, and identify all external parties that may financially benefit from the transaction.
"As these financial actors acquire more and more healthcare real estate, the public should demand increased transparency," Bruch said.
"Changes in hospital financial performance and quality of care after real estate investment trust acquisition: quasi-experimental difference-in-differences study" was published in The BMJ in December 2025. Co-authors are Joseph Dov Bruch, Tarun Ramesh, Eric Boyang Yu, Jie Zheng, Jessica Phelan, E John Orav, and Thomas C Tsai
