U.S. Healthcare Faces Major Disruptions as Rite Aid, Walgreens, and Prospect Medical Holdings Undergo Closures and Bankruptcy

In May 2025, the U.S. healthcare system is experiencing significant upheaval due to financial distress among major providers. Rite Aid has filed for Chapter 11 bankruptcy for the second time, planning to close or sell all of its 1,240 stores across 15 states. Walgreens is also downsizing, with plans to shutter 500 locations in 2025 as part of a broader strategy to close 1,200 underperforming stores by 2027. Additionally, Prospect Medical Holdings filed for Chapter 11 bankruptcy in January 2025, leading to the closure or downsizing of multiple hospitals, particularly in Pennsylvania. These developments are causing widespread concern about access to pharmacy and hospital services, especially in rural and underserved communities.

Rite Aid’s bankruptcy, announced on May 5, 2025, is attributed to mounting debts and numerous lawsuits related to the opioid crisis. The company has secured $1.94 billion in financing to maintain operations during the restructuring but expects to proceed with layoffs. Walgreens’ closures are part of a $1 billion cost-cutting initiative, with 70 stores already closed since the start of the year. Prospect Medical Holdings’ bankruptcy has led to overcrowding and longer wait times in remaining facilities, with labor unions reporting widespread layoffs and delayed paychecks. Lawmakers are calling for investigations into financial mismanagement as these closures place millions of Americans at risk and intensify concerns about the sustainability of the nation’s healthcare infrastructure.