“While the Massachusetts bill has many weaknesses, it is a significant step forward beyond what has been done previously and what other states have done,” said Eileen Appelbaum, co-director of the Center for Economic Policy Research in Washington, D.C. spoke. A think tank based in “And this is also a message to other states: It’s okay to regulate.”
This is done, in part, by targeting one of the following key methods: Steward owner withdrew funds from the system A major factor in last year’s bankruptcy in Massachusetts was a ban on hospitals from selling major campuses to outside investors.
The Massachusetts law also accomplishes what many states have attempted and failed to do: establish ongoing financial oversight and oversight of investors in health care providers.
Under the law, investors with as little as 10% of the stock would be required to participate in the state’s annual healthcare oversight hearings and submit ownership and governance information to the state, including notifications when buying or selling stock in the system. It is mandatory to submit the information to the relevant monitoring organization. The country’s watchdog could go so far as to require audited financial statements from stock investors.
David Seltz, executive director of the state’s Health Care Policy Commission, said researchers have previously used Google searches and investor podcasts to understand the scale of private equity investment in health care in Massachusetts. He said that he needed to listen to the He said the law is a great first step in “lifting back the veil” on the implications of ownership and relationships.
The law helps regulators understand who is profiting from the state’s critical health infrastructure, but it doesn’t stop it. the profiteering Overall. Mary Bagbee, a researcher at the private equity stakeholder project, a nonprofit watchdog, says real reform would require legislation that completely curbs the profit-driven decision-making that contributed to the health system’s failure in the first place. He said that it would be necessary to enact it.
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“There is a tendency to avoid actually pursuing commercial practices themselves that we know actually only have an extractive role in health care,” Bagbee said.
But it would curb certain business practices. Globe Spotlight Team Found A big part of Steward’s problems was the sale and leaseback of the hospital building itself.
Many of these sales involve companies called real estate investment trusts (REITs), which hold portfolios of properties and make money by renting them out. In 2016, Steward sold its properties to one such company. Medical Properties Trust, based in Birmingham, Alabama — $1.25 billion. The amount was nine times what Steward himself had originally paid for it, and Steward’s owners made a large profit from the sale. But the deal tied the hospitals to long-term leases, forcing International Health System to pay high rents that contributed to its bankruptcy and ultimately cost Kearny Hospital in Dorchester and Nashoba Valley in Ayer last summer. This led to the closure of the medical center.
Such transactions would be prohibited in most cases under the new law.
A spokesperson for Medical Properties Trust did not respond to a message seeking comment on Massachusetts’ new law.
Jilui Song, associate professor of health policy and medicine at Harvard Medical School The Boston court also ruled on many of the other tools private equity firms use to extract money from their companies, such as piling debt on hospital systems while extracting payments from investors and themselves. stated that the new law does not mention it. But in many ways, countries need to take this step first to clarify who owns what in the health care industry, he said.
“We can definitely go further, that’s definitely true,” he said. “But…I see this as a substantially meaningful step in the right direction.”
State Sen. Cindy Friedman, D-Arlington, supported a stronger version in the Senate that would require private equity firms to post a bond with the state when filing notice of a deal. But she also praised the move as a good start. He said he plans to submit new legislation to the new Congress this week that would enact further restrictions on private equity ownership in the health sector, including bond obligations.
“This was a compromise and a first step,” Friedman said. “Now we must continue.”
This is far more than any other state has done.
In September, California Governor Gavin Newson exercised the right of veto The proposal would have required private equity groups and hedge funds to obtain state attorney general approval for certain investments in medical facilities and provider groups. Similar efforts It also failed in Minnesota, Oregon and Connecticut.
Connecticut Sen. Dr. Saud Anwar emphasized the need for federal, state, and local protection from “the greed of entities like private equity and REITs that are more interested in profits than the welfare of patients.”
In his work as a doctor, Anwar said he has seen the harm that private equity controls can cause, including delays in the results of important medical tests such as CT and MRI scans.
“I have yet to see a good example come out of it,” he said. “This behavior is nothing short of a crime. It is centered around financial gain for a few people whose greed knows no bounds, and does nothing for the well-being of patients.”
Other states are grappling with destabilizing health systems owned by private equity. Prospect Medical Group, once backed by private equity group Leonard Green, which owns three hospitals in Connecticut and two in Rhode Island, has filed for bankruptcy. Early this month.
Rhode Island Sen. Lou DiPalma said his state has strong oversight of hospital renovations, but could go even further given the Massachusetts bill, especially the restrictions on real estate investment trusts. He said that there is.
Louisiana Rep. Michael Echols, near Steward’s Glenwood Regional Medical Center, also sponsored a bill that would subject executives of equity investors, such as REITs, to civil liability if a medical facility is not properly operated for 36 consecutive months. I plan to submit it to the state.
“It’s like a big cartel with a shield,” Echols said. “I just want to take away the shield so the cartels can’t win.”
Jessica Bartlett can be reached at jessica.bartlett@globe.com. follow her @JessBartlett. Catherine Carlock can be reached at catherine.carlock@globe.com. follow her @bycathcarlock.
