States try to limit private equity in health care

Axios

17-03-2025

At least a half dozen states are racing to limit or put new checks on private equity-fueled mergers in health care, signaling mounting concern about the influence of corporate medicine.
Why it matters: While Congress and the Federal Trade Commission have increased scrutiny of the deals, especially involving hospitals, federal policymakers have been reluctant to bestow more government power over business transactions. States, meanwhile, are increasingly concerned about a growing number of providers being controlled by out-of-state for-profit companies.
"[W]e definitely see states really carrying a torch now," said Chris Noble, policy director at the Private Equity Stakeholder Project.
Driving the news: Massachusetts Gov. Maura Healey in January signed a law expanding state oversight of health care transactions involving private equity firms, as well as real estate investment trusts (REITs) and management services organizations.
Last week, Maine lawmakers introduced a bill to create a moratorium on PE buying hospitals.
In Pennsylvania Gov. Josh Shapiro's budget request last month, he asked the legislature to move a measure to empower the state's attorney general to review health care transactions.
Other states with pending legislation include California, Connecticut, Indiana, Oregon and Texas. At least 13 states have introduced 26 bills dealing with private equity investment in health recently.
The private equity sector is expected to vigorously fight back.
"Across America, local communities rely on private equity investment to ensure that residents have access to the care they need. Private equity strengthens telehealth services, backs urgent care facilities in rural communities, and drives medical innovation that saves lives," Drew Maloney, CEO of the American Investment Council, told Axios in a statement.
The organization previously told Axios that "headline-seeking politicians continue to place misguided blame on our industry."
Yes, but: While this has traditionally been a mantle taken up by the Democrats, there is some Republican interest in the issue, mainly around the investigations of how private equity ownership, with its focus on short-term profits, is influencing patient care.
The big picture: Fast-expanding private equity ownership in health care around the U.S. has been associated with higher prices, increased medical debt, lower quality and financial harm that has led to the closure of safety-net hospitals.
Legislative scrutiny has been increasing in recent years but reached a new level of awareness and urgency with the bankruptcies of Steward Health and Prospect Medical Holdings.
State efforts to regulate private equity in healthcare have largely stalled due to industry opposition, political hurdles and legal concerns.
What to watch: In a move that could signal continued federal regulatory scrutiny under the Trump administration, the FTC earlier this month sued to block a $627 million PE acquisition of a medical device coatings maker.
In January, a bipartisan Congressional report launched by Sen. Chuck Grassley (R-Iowa) found financial interests were prioritized over patient interests.
After introducing legislation aimed at regulating private equity in health care in the last Congress, Sen. Elizabeth Warren (D-Mass.) recently signaled intentions to resume her push against the industry.