States Aim to Stifle Private Equity’s Involvement in Health Care System
By Consumers for Quality Care, on September 4, 2024
Lawmakers in two states – California and Massachusetts – want to slow private equity’s expansion into health care, The Wall Street Journal reports. Often, when private equity firms acquire hospitals, their primary ambition is to turn a profit. These firms often load the hospitals up with debt, charge them questionable management fees, sell off their land and other valuable assets, and then extract huge dividends for themselves. These practices enrich private -equity investors only by financially crippling the hospitals, leaving them less able to give patients high-quality care.
Both states are considering measures to increase scrutiny over proposed private equity deals in health care. They may also require private equity firms to publish detailed financial reports about their health care investments, in a bid to increase transparency. Policymakers hope that these measures will help regulators understand exactly how private equity ownership affects consumers and the care available to them.
Private equity’s involvement in Steward Health, a hospital operator in Massachusetts, led the company to declare bankruptcy earlier this year. Steward’s financial troubles have hurt its ability to provide quality care to patients, endangering the health of thousands of consumers, with low-income consumers most at risk. Steward could also be forced to close hospitals as a result of bankruptcy, further limiting the care available to consumers.
Steward Health’s situation has caught the attention of both U.S. Senators from the state, Ed Markey and Elizabeth Warren, who have proposed measures to hold private equity executives accountable and increase transparency surrounding these deals to ensure consumers are protected.
CQC is deeply troubled by the growing trend of private equity-owned hospitals, especially given that their business tactics don’t line up with the care that patients should receive. Health care providers must prioritize patients over profits to ensure lower cost, high quality care.
