California Bill Would Tighten Oversight on Private Equity Hospital Purchases

According to Medscape California lawmakers are considering a bill that would tighten oversight of private equity and hedge fund buyers of hospitals and healthcare facilities (1). Private equity investment in hospitals and physician groups has been under scrutiny in recent months after a slew of high-profile failures, including bankruptcies and hospital closures. California lawmakers have drafted a bill that would require private equity firms and hedge funds to give the state attorney general written notice before purchasing a healthcare facility or provider group. The attorney general would have to approve the transaction. Buyers would also be required to submit written notice to any federal or state agency as required by law within 90 days of the transaction, and the attorney general could extend that period. The bill gives the attorney general the power to halt an acquisition if there is a "substantial likelihood of anticompetitive effects" or if it would affect access of healthcare services delivered to the community.

Physician groups would also be affected by the bill; private equity groups or hedge funds would be prohibited from controlling the practice and the practice physicians would not be able to sign a deal with an entity partially or wholly directed by a private equity group or hedge fund if those firms provide other services to the physicians for a fee.

Richard A. Robbins MD

Editor, SWJPCCS

Reference

1. Dyrda L. California Bill Would Tighten Oversight on Private Equity Hospital Purchases. Medscape. June 10, 2024. Available at: https://www.beckershospitalreview.com/finance/california-bill-would-tighten-oversight-on-private-equity-hospital-purchases.html#:~:text=California%20lawmakers%20have%20drafted%20a,have%20to%20approve%20the%20transaction (accessed 6/10/24).

Cite as: Robbins RA. California Bill Would Tighten Oversight on Private Equity Hospital Purchases. Southwest J Pulm Crit Care Sleep. 2024;28(6):90. doi: https://doi.org/10.13175/swjpccs026-24 PDF

Private Equity-Backed Steward Healthcare Files for Bankruptcy

Arizona Attorney General Kris Mayes (1) has launched an investigation into what led to Dallas-based Steward Health Care filing for Chapter 11 bankruptcy protection on May 6. The health system also recently shared that it is $9 billion in debt and has plans to sell all 31 of its hospitals, four of which are in Arizona and have a proposed auction date of June 28, according to a May 10 news release from Ms. Mayes (1). 

Steward relied on backing from private equity investors to quickly acquire dozens of community hospitals, including facilities in Massachusetts, Texas, Florida, and Arizona. Steward has been the focus of a year-and-a-half-long CBS News investigation revealing how private equity investors have siphoned hundreds of millions of dollars from community hospitals with devastating public health consequences (2). Records reviewed by CBS News showed Steward hospitals around the country left a trail of unpaid bills, at times risking a shortage of potentially lifesaving supplies.

Steward's Arizona hospitals include: Florence (Ariz.) Hospital, Mountain Vista Medical Center in Mesa, Ariz., St. Luke's Behavioral Health Center in Phoenix, and Tempe (Ariz.) St. Luke's Hospital. Along with the hospitals, Steward also operates multiple medical practices across the state. 

“Arizonans deserve to know more about the circumstances that led to Steward's bankruptcy filing," Ms. Mayes said in the release (1). "I am deeply concerned about the potential impact this could have on Arizona patients and medical providers. No matter who ultimately ends up owning and operating these facilities, I am committed to ensuring that no Arizonan is harmed by this bankruptcy, and I will fight to ensure that these hospitals remain open at all times to care for patients without any degradation of service."

Richard A. Robbins MD

Editor, SWJPCCS

References

1. Arizona Attorney General. Attorney General Mayes Announces Investigation into Steward Health Care’s Bankruptcy. May 10, 2024. Available at: https://www.azag.gov/press-release/attorney-general-mayes-announces-investigation-steward-health-cares-bankruptcy (accessed May 11, 2024).
2. Schooley M, Hager C, Kaplan M. Steward Health Care files for Chapter 11 bankruptcy. CBS Boston. May 7, 2024. Available at: https://www.cbsnews.com/boston/news/steward-health-care-bankruptcy/ (accessed May 11, 2024).

Cite as: Robbins RA. Private Equity-Backed Steward Healthcare Files for Bankruptcy. Southwest J Pulm Crit Care Sleep. 2024;28(5):71. doi: https://doi.org/10.13175/swjpccs021-24 PDF