'Health Over Wealth': New Bill Would Crack Down on Private Equity in US Healthcare

Sen. Ed Markey and Rep. Pramila Jayapal on Thursday introduced legislation that would tighten the rules on private equity firms in the healthcare industry.

The Health Over Wealth Act would increase the powers of the U.S. Department of Health and Human Services to monitor and block private equity deals in the healthcare industry. It would require private equity firms buying healthcare providers to set up escrow accounts large enough to fund five years of operations, and would require more transparency on debt, executive pay, and other financial data, while prohibiting the "stripping" of assets.

"Private equity firms and greedy corporate executives are using the healthcare system as a piggybank," Markey (D-Mass.), chair of the Health, Education, Labor, and Pensions (HELP) Subcommittee on Primary Health and Retirement Security, said in a statement. "Putting profit over patients' results in substandard care, while health workers suffer, and communities are left to clean up the mess."

Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, emphasized the toll that the private equity approach has on patients.

"Private equity firms buying up health care systems are simply bad news for patients, leading to worse health outcomes and higher bills," said Jayapal, who had previously introduced narrower legislation on private equity in healthcare. "We have a duty to protect patients from greedy corporations that are prioritizing their bottom line over patient care."

The bill's introduction came as the Senate HELP Committee on Thursday voted to launch an investigation into profit-first practices at Steward Health Care, a for-profit system formerly owned by a private equity firm and now in bankruptcy.

HELP voted to subpoena Steward CEO Ralph de la Torre, whom CBS News, which has conducted a series of investigations into the negative impact of private equity firms on community hospitals, described as "reclusive." De la Torre bought a 190-foot megayacht even as Steward's hospitals failed to pay their bills and keep supplies of life-saving equipment available, CBS reported.

Sen. Bernie Sanders (I-Vt.), HELP's chair and a cosponsor of the Health Over Wealth Act, called out de la Torre on social media on Thursday.

"Private equity vultures are making a fortune by taking over hospitals and leaving them in shambles," he wrote. "It's time for the CEO of Steward Health Care to get off his yacht and explain to Congress how he got rich while bankrupting the hospitals he manages."

The other cosponsors of the new bill include only a handful of progressive senators and representatives, but concern about the role of private equity in healthcare goes beyond progressive circles. The HELP Committee, which includes 10 Republicans, voted 20-1 to launch the investigation into Steward. And a Bloomberg columnist on Thursday published an opinion piece entitled "Steward Health is a case study in executive greed" and subtitled: "Why is populism on the rise? The gutting of a community hospital system illustrates why so many Americans feel betrayed by big business."

The negative impact of private equity's role in the healthcare industry is significant. Researchers at Harvard Medical School found an "alarming increase in patient complications" at private equity-owned hospitals in a study published in December in JAMA, a leading medical journal.

The new bill, which Markey previewed at a field hearing in Massachusetts in April, may be a long-shot for passage, given corporate influence in Congress. Axios called it "more aspirational than legislative" at the time.