AMNA NAWAZ: Steward Health Care was at one point the largest private hospital system in the country.

When the private equity-backed network filed for bankruptcy last year, it devastated providers and patients.

GEOFF BENNETT: In Massachusetts, five of the eight Steward-owned hospitals were salvaged by the state, but two were shuttered.

Economics correspondent Paul Solman went to see what and how it happened.

PAUL SOLMAN: At first, hope.

AUDRA SPRAGUE, Former Nurse at Nashoba Valley Medical Center: We thought when they came in, great, we're going to have a bigger company.

They're going to put money into it.

PAUL SOLMAN: Money from a rich and supposedly savvy private equity firm, Cerberus, and the new hospital network, Steward Health Care, would be run by a noted heart surgeon, Ralph de la Torre, for struggling hospitals, an injection of cash, plus medically-minded leadership.

A good match, right?

ELAINE GRAVES, Former Nurse at Carney Hospital: It was just run so poorly and so mismanaged.

PAUL SOLMAN: Elaine Graves was a nurse at Carney hospital in Boston's relatively poor Dorchester for nearly 50 years before its being shuttered last summer, because, says Graves, after Cerberus bought the hospital in 2010: ELAINE GRAVES: Things were being broken, elevators.

They weren't working.

We're down to one elevator.

PAUL SOLMAN: Audra Sprague was a nurse at another Cerberus Steward hospital.

AUDRA SPRAGUE, Former Nurse at Nashoba Valley Medical Center: Over the years, it was one cut after the other and staffing cut.

We were on credit holds because we weren't paying our bills.

PAUL SOLMAN: The M.O.

of private equity, leverage buyouts, the buyer, in this case, Cerberus Steward, goes to a lender for a many-million-dollar loan, gets the money, that's the leverage, which just means debt, which it then uses to buy properties like a hospital.

The property then has to pay off the debt.

One way to do that, cut costs, ignore bills.

ELAINE GRAVES: People will come in for surgery.

They couldn't get the equipment.

So they had to send them home.

Sorry.

It happened all the time.

They owed so much money to creditors for equipment That they wouldn't give them anymore.

PAUL SOLMAN: We heard it time and again, unpaid bills, cuts in resources.

And yet a Boston Globe investigation found that CEO de la Torre traveled by private jet and managed to buy a $40 million yacht.

Steward's bankruptcy made national headlines.

Private equity Cerberus which sold Steward for an $800 million profit, was blamed.

Cerberus wouldn't go on the record to us, but provided additional background last fall, claiming complaints and lawsuits -- quote -- "appear to be overwhelmingly related to the post-Cerberus ownership period, and portray a stark contrast to Cerberus' ownership period, during which Steward was delivering high-quality care to millions of patients and employing thousands of hardworking professionals."

But nurse Elaine Graves, who does seem like a hardworking professional, began to notice cuts soon after the buyout, years before the private jet.

And then?

ELAINE GRAVES: They just kept chopping and chopping, and until there was nothing left.

PAUL SOLMAN: Does she blame private equity ownership?

ELAINE GRAVES: Yes, because that's the one that took everything away from these patients and from the community.

PAUL SOLMAN: So where do patients go since the hospital closure in Dorchester?

ELAINE GRAVES: They're going into the Boston hospitals and overwhelming those hospital emergency loans.

Infants are waiting out in the parking lot for an hour, hour-and-a-half just to get into the hospital.

PAUL SOLMAN: No surprise, as, 40 miles northwest of Boston, in Ayer, same story.

Nashoba Valley Medical Center, also part of the takeover, also shut its doors.

ROBERT PONTBRIAND, Ayer Town Manager, Massachusetts: We have had a hospital in Ayer for over 120 years, in the current site for 60 years.

PAUL SOLMAN: Town manager Robert Pontbriand.

ROBERT PONTBRIAND: We lost the health care not only for Ayer, but for the Nashoba Valley region; 600 jobs are gone, and we're still feeling the pain.

The impact to the emergency management system has put it into a crisis threshold.

PAUL SOLMAN: That would be the town fire department.

JEREMY JANUSKIEWICZ, Ayer Fire Department: Most of our calls are EMS.

The vast majority of time we spend on a day is prepping for EMS.

PAUL SOLMAN: How long for an emergency when Nashoba was open, call to delivery at the hospital?

JEREMY JANUSKIEWICZ: We could do that all in about 30, 30 to 40 minutes.

PAUL SOLMAN: Now?

JEREMY JANUSKIEWICZ: Anywhere from an hour to two, depending on where we're going.

PAUL SOLMAN: And when the ambulance does get to nearby hospitals, they're now swamped.

AUDRA SPRAGUE: It's been chaos here.

PAUL SOLMAN: Nashoba nurse Audra Sprague.

AUDRA SPRAGUE: There's another hospital that's a community hospital as well about 15 miles from where Nashoba was, but it's already overwhelmed.

And they have seen a 20 percent increase in their emergency room visits since we closed.

PAUL SOLMAN: And it's not just a loss of the E.R.

CHRIS MARTIN, Professional Tree Trimmer: Ended up getting pulled up into the air.

PAUL SOLMAN: Professional tree trimmer Chris Martin.

CHRIS MARTIN: And then when I let go, the limb came down, crushed my ankle and broke my leg, and then fell sideways, breaking two ribs on this side, all my ribs on this side, punctured the lung, gave me a brain bleed, destroyed my ear, fixed my ankle with pins.

And then trying to get into rehab because Nashobah closed, and it's taken me nine weeks just to get into a slot, because they're also inundated with all the people coming from Nashobah.

PAUL SOLMAN: And while he had to wait, he got worse.

CHRIS MARTIN: I'm getting more and more headaches and that's why I ended up going to the emergency room last week because my headaches.

They usually only lasted about an hour, and they have been lasting longer and longer and longer.

We had to drive all the way out to Worcester because the hospital's closed.

So we got there in the afternoon, 2:30, 3:00, and then we didn't get home until 2:30... ALLIE MARTIN, Wife of Chris Martin: One-thirty.

CHRIS MARTIN: ... 1:30 in the morning.

PAUL SOLMAN: And that's just for neurology, says his wife, Allie, who was a receptionist at Nashobah.

ALLIE MARTIN: If you have one injury, you get discharged, you have one doctor you're following up with.

Well, he's got seven different doctors he's following up with.

PAUL SOLMAN: Scattered all across the region.

ALLIE MARTIN: All of his follow-up, we probably could have done at Nashobah.

So the chaos of trying to do everything at a hospital where our primary care isn't affiliated is one difficulty, and spending nine hours at an E.R.

just to get a CAT scan to make sure his head bleed didn't start again or there was something acute that was happening.

It just shouldn't take that long.

PAUL SOLMAN: Meanwhile, a sudden call to deliver another man who fell from a tree to a medevac helicopter to get him to the nearest hospital quickly.

But the copter was grounded.

A seven-minute ride became a 45-minute ordeal.

So is what happened in Ayer and Dorchester a one-off, one company with an unscrupulous CEO, or is it not that unusual when private equity gets into health care?

Stay tuned for our next report.

For the "PBS News Hour," Paul Solman in Dorchester and Ayer, Massachusetts.