Lawmakers' bill seeks to regulate private equity in healthcare
The legislation would introduce new safeguards and close tax loopholes that benefit real estate investment trusts.
Photo: John Baggaley/Getty Images
Congresswoman Pramila Jayapal, D-Wash., and Senator Edward J. Markey (D-Mass.) have introduced the Health Over Wealth Act, legislation that would require greater transparency for private equity firms and for-profit companies that own healthcare entities, including hospitals, nursing homes, and mental or behavioral health facilities.
Jayapal is a member of the House Judiciary Subcommittee on Health, Employment, Labor, and Pensions, while Markey is chair of the Health, Education, Labor, and Pensions (HELP) Subcommittee on Primary Health and Retirement Security.
The legislation would put safeguards in place that are meant to protect workers, patients, and healthcare access and safety; create stronger accountability measures for corporations; and close tax loopholes that benefit real estate investment trusts making money off of healthcare property.
"Private equity firms buying up healthcare systems are simply bad news for patients, leading to worse health outcomes and higher bills," said Jayapal. "We have a duty to protect patients from greedy corporations that are prioritizing their bottom line over patient care."
WHAT'S THE IMPACT?
Specifically, the Health Over Wealth Act would require that private equity-owned healthcare facilities publicly report on their debt and executive pay, lobbying and political spending, healthcare costs for patients and insurance plans, and any reductions in services, wages or benefits.
It would also require that private equity-owned firms set up escrow accounts to cover five years of expenses to ensure continuation of care in the event of a hospital closure or service reduction.
The bill would then authorize the Department of Health and Human Services to revoke investment licenses from private equity firms that price gouge, understaff or create access barriers to care, and establish a task force to review the role of private equity and consolidation in healthcare, including how market trends create or exacerbate disparities.
Finally, the bill seeks to prohibit private equity firms from stripping assets from healthcare entities, and close tax loopholes for real estate investors in order to disincentivize healthcare entities from selling their property and then paying overly high rents to the investors.
The bill is cosponsored by Senators Tammy Baldwin (D-Wis.), Peter Welch (D-Vt.), Jeff Merkley (D-Ore.), Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), Tina Smith (D-Minn.), Richard Blumenthal (D-Ct.) and Representatives Becca Balint (D-Vt.), Val Hoyle (D-Ore.), Eleanor Holmes Norton (D-D.C.) and Mark Pocan (D-Wis.).
The legislation is endorsed by American Federation of State, County and Municipal Employees (AFSCME), American Federation of Teachers (AFT), Americans for Financial Reform, Committee of Interns and Residents (CIR-SEIU), Community Catalyst, Massachusetts Nurses Association, National Nurses United (NNU), Moral Injury of Healthcare, Private Equity Stakeholder Project, Public Citizen, and United Steelworkers (USW).
THE LARGER TREND
The bill is the second in as many months to attempt to tackle private equity abuse in healthcare. In June, Markey and Warren introduced legislation they said is intended to root out corporate greed and private equity abuse in the healthcare system.
They cited a McKinsey study suggesting that, over the last decade, private equity fund assets have more than doubled, totaling $8.2 trillion in 2023.
While private equity funds have purchased companies in nearly every sector of the economy, Warren and Markey said their dealmaking in the healthcare sector poses risks to patient health and raises questions about potential abuse of taxpayer dollars.
Private equity in healthcare saw its second highest year on record in 2022, closing on roughly $90 billion worth of deals, according to a 2023 report from consulting firm Bain & Company.
Around the same time, AHIP released a brief on private equity investments in healthcare, saying the need of these firms to achieve high returns, including through the use of provider consolidation, directly conflicts with the goal of lowering costs.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
