WASHINGTON – U.S. Representative Pramila Jayapal (WA-07) is today introducing legislation to combat private equity in American health care.
“Private equity and consolidation in our health care system lead to worse outcomes and higher bills for patients,” said Congresswoman Jayapal. “Health care is a human right and the care people receive shouldn’t be determined by an investor’s bottom line. My HOT Act will shine a light on the dangers of private equity in our health care system and move us toward accountability for providers and patients.”
Private equity entrenchment in our health care system is only getting worse. In 2021, private equity firms funneled $206 billion into 1,400 health care acquisitions. When private equity invests in a healthcare facility, they often cut staff, perform more complicated and costly procedures on patients than necessary, strip the care center of assets, let it fail when no longer profitable, then close and sell it to developers. These actions serve private equity’s only goal, to make profits, while causing irreparable harm to patients.
“Wall Street vultures are swooping down and picking apart health care providers, making a broken health care system even worse,” said Robert Weissman, President of Public Citizen. “This bill would help us finally begin to identify the private equity vultures that are lowering the quality of care across the nation. It is a crucial first step in creating accountability and protecting patients.”
“Despite a track record that includes looting safety net hospitals, saddling patients with obscene surprise medical bills, and leaving nursing homes understaffed and residents neglected, private equity investment in healthcare remains hidden in the shadows,” said Eileen O’Grady, Director of Healthcare Research at PESP. “The private equity business model aims to double or triple an investment in just 3-5 years, funding massive payouts for wealthy investors at the expense of the quality of care patients receive. In the worst cases, these companies have free reign to use healthcare providers as their personal piggy banks. The Healthcare Ownership Transparency Act will bring these shadowy Wall Street actors and their questionable practices to light, so they can no longer raid critical healthcare infrastructure with impunity.”
“Private equity is about short-term profits, nothing more,” said Diane Archer, Just Care USA. “Ensuring people get needed care is about investing for the long-term. The HOT Act would allow the administration to guard against private equity health care acquisitions until more is understood about their consequences.”
The Healthcare Ownership Transparency Act would:
- Require the disclosure of information from private equity funds involved in healthcare including the identities of those with interests in the fund and their ownership interests, the debt held by the fund and its covered healthcare firms, the performance of the portfolio companies, and fees and payments collected by the firm, and all political spending related to healthcare by the private equity fund and affiliates. Disclosure would occur through the Provider Enrollment, Chain, and Ownership System (PECOS), a Centers for Medicare and Medicaid Services (CMS) provider enrollment and revalidation process.
- Direct the Government Accountability Office (GAO) to write a report on how healthcare consolidation and private equity contribute to various health quality and cost indicators, including cost to charge ratios, payor mix, quality ratings, regulation compliance violations, staffing levels and ratios, and employee wages among others.
- Direct the Secretary of the U.S. Department of Health and Human Services (HHS) to create a task force to identify best practices and provide regulatory and legislative recommendations to Congress to address the adverse effects of healthcare consolidation and private equity’s involvement in healthcare.
- Allow the Secretary to prohibit private equity firms from gaining control of covered healthcare firms until the effects of private equity ownership on healthcare entities are understood by the task force.
Jayapal has been a longtime advocate for stopping the privatization of our health care system. Last month, she led 70 lawmakers in calling on the Centers for Medicare and Medicaid Services (CMS) to implement reforms to Medicare Advantage (MA) to improve health care for seniors and people with disabilities. Unlike traditional Medicare, MA plans are administered by private insurers and in recent years have been found to be fraught with waste, fraud, and abuse, too often putting corporate interests over patient outcomes. She is also the lead sponsor of the Medicare for All Act.
Issues: Health Care