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Two Pennsylvania Democratic lawmakers, State Senator Tim Kearney, D-Pa, and State Representative Lisa Borowski D-Pa, have reintroduced companion bills to strengthen oversight of healthcare mergers and acquisitions in Pennsylvania.
The bills are intended to shield facilities from the “harmful effects of unchecked corporate ownership in the healthcare industry,” according to Senate Bill 322 and House Bill 1460.
They would grant the Pennsylvania Office of Attorney General authority to oversee hospital mergers, acquisitions, and major financial transactions that have the potential to jeopardize patient access and public health.
The legislation was a direct response to the recent closure of Crozer Health. The health system permanently closed its two remaining hospitals, leaving thousands of employees without jobs and essentially leaving a healthcare desert in the area.
“Crozer’s tragedy has shown us exactly how damaging unchecked corporate greed can be,” said Kearney. “When private equity is allowed to run rampant through our healthcare system, communities like Delaware County are left with closed hospitals, lost jobs, higher healthcare costs, and limited options to turn to for emergency care.”
WHAT’S THE IMPACT
Both Kearney and Borowski are members of the Delaware County Legislative Delegation and have been advocating for reforms like this since about 2022.
The first legislative package, introduced by the delegation in June 2022, saw no movement in the General Assembly. Last year, Rep. Borowski’s House bill gained momentum, passing the House but ultimately stalled in the Senate.
The bills would grant the Office of the Attorney General expanded authority to review mergers, acquisitions, and other major financial transactions involving health systems; prohibit healthcare sale-leaseback agreements by private equity firms; require healthcare entities to submit detailed financial and operational disclosures before completing major transactions; and allow deals to be evaluated on a case-by-case basis.
Kearney and Borowski expect legislative action to begin when the legislature reconvenes in Harrisburg the first week of June.
“This is one of those pivotal moments for us as lawmakers elected by the people to represent their interests,” said Borowski. “How we choose to respond to the crisis private equity firms are inflicting on our healthcare system will speak volumes to Pennsylvanians about our courage to do what’s right.”
THE LARGER TREND
A bipartisan Senate report on private equity ownership of two health systems showed PE investment prioritizes profit over patient health and hospital finances.
A yearlong investigation found that patient care deteriorated at both systems, while private equity owners received millions, according to the Senate Budget Committee’s bipartisan staff report, “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System.”
PE and other private funds had less than $1 trillion in managed assets in 2004, but now manage more than $13 trillion globally. PE firms create affiliated funds with money raised from investors, such as pension funds, foundations and insurance companies. The intention is generating returns for their investors within a short period of time.
PE has grown in healthcare. In the 2010s investors spent more than $1 trillion. By 2021 PE investment had reached an all-time high of 515 deals valued at $151 billion.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
