Senator Hochadel Votes to Pass Bill Restricting Private Equity in Connecticut Healthcare
Senator Jan Hochadel, D-Meriden, Senate Chair of the legislature’s Aging Committee, voted Wednesday to pass Senate Bill 196, a proposal to restrict private equity control of Connecticut healthcare facilities.
“When private equity comes into a hospital with no interest in patient care and no accountability to the community, patients are the ones who pay the price,” Senator Hochadel said. “Connecticut lived through that reality and it nearly cost us three community hospitals. This bill draws a clear line: Connecticut’s hospitals exist to serve patients, not to enrich investors, and we will not let Wall Street strip those institutions down to their bones while the people who need care are left behind.”
Senate Bill 196 takes two steps to limit private equity presence in Connecticut healthcare. First, it would prevent so-called “sale-leaseback” arrangements of Connecticut hospitals beginning in July, 2027. This change would prevent hospital owners from selling their properties to another party then leasing the same land in a transaction that has generated profits for private equity firms but weakened the financial standing of the facilities.
The bill would also require hospitals to annually attest to the Department of Public Health that private equity does not have controlling interest in their main campus operations. Hospitals would also need to attest that private equity had no ability to influence their policies or interfere with the decisions of doctors. Violations of these provisions could result in civil penalties of up to $2,000.
State legislators prioritized these safeguards in response to the recent mismanagement of three Connecticut hospitals by for-profit Prospect Medical Holdings, Inc. Prospect’s management of Manchester Memorial, Rockville Memorial, and Waterbury Hospital led to declines in the quality of service until Prospect entered bankruptcy last year.
Prospect engaged in sale-leaseback agreements at its three hospitals, increasing its revenue while leaving the hospitals to pay increased costs.
The Connecticut Hospital Association testified in support of SB 196 when the bill received a public hearing on Feb. 18. The association’s testimony acknowledged the “damage that unregulated private equity investment has caused” healthcare facilities.
The Senate’s Wednesday vote sends SB 196 to the House of Representatives for consideration before the legislative session’s May 6 adjournment.