Massachusetts Democratic Sen. Ed Markey introduced on Thursday strengthened legislation to rein in the actions of private equity firms that invest in healthcare facilities.
The legislation, called the Health Over Wealth Act, 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.
The legislation was introduced the same day as Markey’s committee, the Senate Health, Education, Labor and Pensions (HELP), favorably voted to launch an investigation into Steward Health Care, a private-equity-owned hospital system that operates in Massachusetts. Steward filed for bankruptcy on May 6 with more than $9 billion in debt.
The Senate HELP committee also subpoenaed Steward's CEO, Ralph de la Torre, M.D., who has dodged congressional testimony in recent years, to answer for the financial management of the hospital system.
Companion legislation was introduced in the House by Rep. Pramila Jayapal, D-Washington.
Chair of the committee Sen. Bernie Sanders called for de la Torre to “get off his yacht and explain to Congress how he got rich while bankrupting the hospitals he manages,” in a post on X on Thursday.
Markey’s Health Over Wealth Act would force private equity firms to put out reports on the facilities' pay of executives, set up escrow accounts for facilities and receive a license from the Department of Health and Human Services (HHS) before investing in healthcare facilities. PE-owned healthcare facilities covered in the legislation include hospitals, mental and behavioral health care facilities and nursing facilities.
A press release from Markey's office says the legislation has been strengthened since the senator released a discussion draft of the proposal in April at a Boston field hearing on private equity in healthcare. Since then, he has worked with unions to increase protections for workers by requiring facilities to disclose agreements with union-busting organizations and to prioritize workers in bankruptcy payouts.
The introduced legislation also increases penalties for violations of the provisions outlined in the bill and bans investors from stripping assets of healthcare entities.
The Health Over Wealth Act would also require PE firms to report on lobbying and political spend, healthcare costs for patients, reductions in services for patients and pay or benefit reductions for staff.
PE firms would be required to set up escrow accounts for facilities that could provide for five years of operational and capital expenses in the event of financial disruption. The account would need to include enough funding to dole out supplemental payments to neighboring facilities that take on the facility’s patient load, were it to reduce services.
Before a PE-owned healthcare facility could close or reduce services, the firm would have to notify the public and receive public comments.
The license the bill would require PE firms to obtain from HHS could likewise be revoked by the agency. A task force at HHS would also be created to review the role of private equity and consolidation in healthcare. It could also address and limit the role of PE in healthcare.
The bill would also require that healthcare entities who wish to sell or lease from real estate investment trusts (REITs) submit to HHS for review, or HHS could potentially block it if the sale would mean the entity is weakened financially or public health is at risk. The bill would also close tax loopholes for REITs.