The company that provides health services in Vermont’s prisons, Wellpath, is preparing to file for bankruptcy, according to reporting from Bloomberg.

One of the country’s largest prison health care providers, Wellpath is owned by the private equity firm H.I.G. Capital.

Vermont pays the company almost $40 million per year for health services in its prisons. The state began its contract with Wellpath in July 2023, which increased the annual cost of prison health services by 50% compared to its prior contract with Vitalcore Health Strategies.

Since then, concerns have emerged over the quality of the company’s care in Vermont prisons. Last year, a whistleblower revealed the company’s top health-care administrator at the Springfield prison had lost his nursing license in three states. Not long after, a group of U.S. senators, including Vermont’s Bernie Sanders, raised concerns with the company’s leadership about “inadequate care” provided by Wellpath nationwide.

Wellpath did not respond to questions on Monday. A Vermont Department of Corrections spokesperson said Monday afternoon they were waiting for more information from Wellpath on how bankruptcy could impact the company’s work in Vermont.

According to Bloomberg, multiple credit rating agencies have recently downgraded Wellpath due to its debt and poor earnings, though the company still brought in roughly $2.4 billion in the 12-month period ending June 30, 2024.

It’s difficult to know what the exact impact of Wellpath’s bankruptcy would be, according to Bianca Tylek, executive director of Worth Rises, a nonprofit working nationally to end financial incentives in prisons. Little comprehensive reporting exists on the prison health care industry generally, she noted.

“Wellpath is going to continue to operate,” Tylek said in an interview, but she expects that prison health services won’t attract the same level of investment the sector has seen in recent years.

Other prison health contractors have recently faced financial troubles. Corizon Health Inc., a prison health care provider, transferred its debt to a new company in what some have described as an effort to avoid medical malpractice liability, The Marshall Project reported. The company transferred its assets to a third corporation as part of its financial maneuverings. Tylek also pointed to financial woes at providers Armor Health and Centurion.

For-profit prison health care is “incredibly fraught,” Tylek said, because companies have financial incentives to cut costs or to neglect to provide care, adding, “I don’t think the system can get worse.”

The industry’s “financial crisis,” she hopes, will gradually lead to more public options in the prison health care business. She pointed to Texas, where prison health care is provided by the state university medical system, as a superior alternative.

“When you have and are using public options,” Tylek said, “there’s just more opportunity for taxpayer accountability.”