Lawmakers target private equity in healthcare, citing 'rot'

[Greenbeard]

The Massachusetts senators held a field hearing this week in Boston, shining a light on the ongoing, looming public health crisis as the state's largest for-profit system teeters on the edge. Private equity bought the system over a decade ago, sold the land out from under the hospitals, and got out a few years ago with an $800 million profit. Now, sadly, those hospitals no longer seem capable of delivering the care their communities neeed.

Lawmakers target private equity in healthcare, citing 'rot'

Federal lawmakers are pushing for more oversight of private equity investment in the healthcare industry, citing the ongoing financial struggles of Steward Health Care hospitals.

The national for-profit system has been selling and closing hospitals since last year, this week shuttering New England Sinai Hospital in Stoughton, Massachusetts. Lawmakers worry more facilities will close as Steward’s outstanding rent and vendor payments pile up.

Sens. Edward Markey (D-Mass.) and Elizabeth Warren (D-Mass.) said during a Wednesday Senate Health, Education, Labor and Pensions subcommittee hearing that stricter oversight of Steward transactions could have mitigated its financial decline.

Markey and Warren pointed to private equity firm Cerberus Capital Management, which sold its controlling interest in the system four years ago to a group of Steward physicians. According to Warren and Markey, the exit process netted the firm about $800 million in profit. They also criticized Medical Properties Trust, a real estate investment trust that in 2016 purchased Steward's real estate assets from Cerberus for $1.25 billion in a sale-leaseback transaction.

Markey released a discussion draft during the hearing of the Health over Wealth Act. The bill would require private equity firms that acquire healthcare companies to set aside funding to protect access to care, remove tax breaks that could incentivize corporate investors to strip hospital assets and require private equity firms to disclose their finances publicly and to the Health and Human Services Department.

Steward has been locked in a seven-year legal battle with the Center for Health Information and Analysis in Massachusetts over its alleged refusal to release its complete finances.

Warren plans to introduce legislation to allow the federal government to ban healthcare entities from selling their real estate assets to REITs and claw back compensation from healthcare executives and corporate investors who have ties to ailing healthcare entities, she said during the hearing Wednesday.

She also referenced the Stop Wall Street Looting Act, which would make private equity firms liable for the debt of companies they control and ban dividends to investors and the outsourcing of jobs for two years after a healthcare organization is acquired. The most recent 2021 version of the legislation, which is a reworking of a 2019 bill, did not make it out of the Senate Finance Committee.

Timely, as policymakers in the federal government and in states around the country are increasingly eyeing the growing role that private equity plays in many parts of the health care system. Does "greed is good" hold even for services in which mission, values, and a long-term stake in the communities served have been a no-brainer ingredient for success forever?

Anyway, lots of stuff to probe at this point:

Senate probing whether ER care has been harmed by growing role of private-equity firms

Sen. Gary Peters said he was concerned that emergency medicine staffing companies "may be engaging in cost-saving measures at the expense of patient safety and care."

www.nbcnews.com

Some addiction treatment centers turn big profits by scaling back care

Private equity groups are cashing in on rising rates of alcohol and drug addiction in the U.S.

www.cbsnews.com

Concerns Grow Over Quality of Care as Investor Groups Buy Not-for-Profit Nursing Homes - KFF Health News

For-profit groups own more than 70% of U.S. nursing homes. Industry leaders and researchers wonder whether corporations and investors can succeed where not-for-profit organizations have struggled. Or, will quality of care suffer in the name of making money?

kffhealthnews.org

HHS, DOJ, and FTC Issue Request for Public Input as Part of Inquiry into Impacts of Corporate Ownership Trend in Health Care

Agencies Seek Info on Transactions, Including Non-Reportable Deals

www.hhs.gov

 

[dseag2]

Good to see them at least considering it. Private equity firms have been a bane on healthcare for some time, causing many locations to not only provide inferior service but to close entirely.

When private equity comes to town, hospitals can see cutbacks, closures​

When private equity comes to town, hospitals can see cutbacks, closures • New Jersey Monitor

In the past couple of years, private equity’s foray into hospital ownership has drawn public outrage and, increasingly, legislative scrutiny.

newjerseymonitor.com

 

[Helix]

I'm tired of parasitic entities like this. I watched one of them eat a regional chain until it died. If they are allowed to infect health care, we will all suffer. More regulation is needed.

 

[Threegoofs]

You all might not be aware of this, but private equity is buying up group physician practices at a pretty fast rate.