Last week, U.S. Senators Elizabeth Warren (D-Massachusetts) and Ed Markey (D-Massachusetts) introduced a bill targeting corporate greed in the healthcare sector. The Corporate Crimes Against Health Care Act of 2024 specifically aims at private equity firms, which have seen their assets more than double over the past decade to reach $8.2 trillion last year. According to the American Hospital Association, private equity acquisitions account for 56% of all physician practice takeovers since 2019.
The bill asserts that private equity ownership often harms patient care by imposing excessive debt and extracting high dividends and fees from healthcare providers. Studies, such as one published in JAMA in December, show that private equity-owned hospitals report higher rates of adverse events, including infections and medication errors.
Sens. Warren and Markey highlighted in a press release that private equity’s role was crucial in Steward Health Care’s recent bankruptcy, compelling the firm to sell its physician group and 31 hospitals. If enacted, the bill would impose a new criminal penalty of up to six years in prison for executives whose actions lead to patient fatalities. The Department of Justice and state attorneys would also gain authority to claw back executive compensations and levy civil penalties.
Additionally, the act would prevent healthcare organizations that sell assets or use them as REIT loan collateral from receiving federal health program payments. It also proposes the repeal of a 2017 tax law that benefits REIT investors.
Support for the bill comes from multiple advocacy groups, such as Community Catalyst and the Private Equity Stakeholder Project, citing the negative impact of profit-driven models on healthcare quality and access.
Despite growing scrutiny, not all healthcare leaders agree. Bobby Guy, a shareholder at Polsinelli, argued that the criticism stems from misunderstanding private equity’s role in healthcare innovation. He suggests that previous regulatory changes have limited public market investment opportunities, necessitating private equity’s involvement.
For more details, you can read the full article on MedCity News.