Numerous states — California, Massachusetts, Pennsylvania, Connecticut, Oregon, Washington and Minnesota — have attempted some degree of at least oversight, if not outright prohibition, of private equity healthcare deals, blaming the PE firms for failures.
However, none of the attempts have panned out, according to a Bloomberg report. California Governor Gavin Newsom vetoed legislation that would have allowed the state to prevent PE deals for healthcare facilities. In Massachusetts, a bill to lock REITs out of hospital ownership failed to clear legislative hurdles. Similarly, according to law firm Holland & Knight, attempts in other states also fell flat.
“I don’t think eliminating private equity altogether is either practical or doable,” Massachusetts Governor Maura Healey told Bloomberg in an interview. “I think there is a role for private equity in health care — but the question becomes, what is the role? How do you define that role? I think the legislature is right to be looking at what are the guardrails that we need here.”
In September, private equity lobbyist American Investment Council wrote a letter to Senators Bernie Sanders and Bill Cassidy, the ranking Democratic and Republican senators on the Senate Committee on Health, Education, Labor and Pensions. “America’s health care system has tremendous challenges — but the private equity industry is not the cause,” they wrote.
Fitch Ratings revised its outlook for U.S. nonprofit hospitals from “deteriorating” to “neutral,” according to Becker’s Hospital Review. “Balance sheets remain healthy, and in fact are near all-time highs for many systems, which will continue to support ratings as operating results rebound,” the report said. Balance sheets are “healthy,” but headwinds for 2025 include growing drug expenses, pay mix shifts, strong competition, decline of insurance coverage, policy shifts with the incoming administration, and a growing aging population.
