Whats wrong is it is subjective as to how much income is lost. It opens the government to looting by government employees. Just pass a bill that builds some thing near a failing business and you could make a ton of money on the backs of the tax payer.
Better policy would be to get the government out of businesses that compete with private companies.
If there is not hospital then maybe offer a incentive to build one. Make the incentive open to everyone so that there is no one person that can use the government to get free money.