Private equity firms investing in hospitals will now face increased oversight in Massachusetts under a new law signed by Gov. Maura Healey, as the scandal-plagued ownership of nine hospitals in the state exposed significant risks to patient care. Is.
The new law will increase transparency in opaque financial transactions between hospitals and the investment groups that own them. Healey signed it just before the conclusion of the year's state legislative session.
The legislation would increase financial penalties for hospitals, private equity investors, real estate investment trusts and other entities for failing to submit required financial reporting to the state on a timely basis. The penalty for not submitting information on time would increase from $1,000 to $25,000 per week, and the law would also remove the $50,000 annual limit.
The Attorney General's Office and the Massachusetts Health Policy Commission would also gain greater investigative power over private equity deals and the Commission would have the power to seek testimony from private equity investors and healthcare real estate trusts regarding pricing, financial stability and ownership structure.
The legislation comes as a victory for the state after two hospitals closed last year when their owner, Dallas-based Steward Health Care, declared bankruptcy. Steward, which owned more than 30 hospitals nationwide, was one of the state's largest hospital operators.
For two years, CBS there is news Test Harmful Effect He private equity ownership This could have an impact on US hospitals – particularly in areas where there is high need and low resources. Whereas Steward's Hospital Fighting back, CBS News found evidence of massive spending by CEO Ralph de la Torre, including the purchase of a $40 million yacht in 2021, a $7 million Texas horse ranch in 2022 and two corporate jets worth $95 million.
Healy said at a press conference that the new law would “close loopholes in our regulatory processes so that for-profit providers like Steward Health Care are subject to the same transparency rules as nonprofit providers.” He added, “As Attorney General, I spent years in court trying to hold stewards to this standard, and I am pleased that our laws will no longer be exploited in this way.”
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The legislation would also prevent the Department of Public Health from granting a license to establish or maintain an acute care hospital that has leased its main premises from a real estate investment trust – a strategy supported by the private equity industry that Steward has used to raise money. Had to remove from direct patient care.
During the news conference, Rajya Sabha Speaker Ronald J. “Before Steward Health Care ultimately collapsed, executives spent years hiding its financial information from state regulators, putting patients and our health care system at risk,” Mariano said. “That is why it is so important to ensure that our institutions are equipped to monitor the health care landscape and guard against trends and transactions that drive up costs without improving patient outcomes.”
CBS News contacted Steward Health Care regarding the new law and a representative said the company had no comment.
Earlier this week, the US Senate Budget Committee Issued a scathing report of 162 pages On efforts by two private equity firms to extract profits from other hospital companies in disadvantaged communities, which puts patients at risk.
Senator Sheldon Whitehouse, a Democrat from Rhode Island, who led the investigation along with senators, said, “As our investigation has shown, these financial institutions are putting their profits on patients, leading to health and safety violations , there are staff shortages and hospitals are closing.” Chuck Grassley, a Republican from Iowa.
This came after another Senate committee took the extraordinary step of voting to impeach de la Torre, the CEO of Steward Health Care, in September. In contempt of Congress When he refused to appear after receiving a subpoena to testify on the company's financial failures.
Through a spokesperson, de la Torre has previously denied wrongdoing.
“Dr. de la Torre did everything in his power to help Steward Health Care overcome many industry hurdles and challenges, including personally purchasing the necessary equipment and supplies to meet patients' needs and managing his own assets. personally guaranteeing the loan to the company.” the spokesperson said in a statement.