A few weeks back, I wrote a post on the growing scrutiny private equity is receiving regarding ownership and investment in healthcare companies. That post is here Private Equity Ownership Scrutiny – Reg’s Blog
At the end of that post, I mentioned a follow-up piece on the legislative efforts ongoing at the Federal level, focused on limiting or restricting or completely forbidding private equity investment and/or ownership in healthcare companies, principally hospitals and nursing homes. What follows is my rundown of legislation that has been introduced since 2023, targeting PE ownership and investment in healthcare companies. Note: None of these bills has actually advanced to a vote…so far.
Stop Corporate Crimes Against Health Care Act of 2026
On February 11, 2026, Senators Elizabeth Warren (D-Mass.), Ed Markey (D-Mass.), Richard Blumenthal (D-Conn.), Peter Welch (D-Vt.), and Jeff Merkley (D-Ore.), along with Representative Maggie Goodlander (D-N.H.), reintroduced the Stop Corporate Crimes Against Health Care Act of 2026, initially presented in 2024. The proposed legislation aims to reduce corporate influence within the healthcare system.
Senator Warren referenced the bankruptcies of Genesis HealthCare and Steward Health Care as motivating factors for this bill, characterizing these events as significant risks to patient and senior welfare. Her remarks underscored her belief in the necessity of minimizing private equity involvement in healthcare, noting patterns of financial exploitation by such firms. She advocated for substantive legal accountability for executives whose actions threaten patients and communities.
The Act establishes new federal crimes, imposing penalties of up to six years’ imprisonment. It authorizes recovery of up to ten years of executive compensation and levies civil penalties up to five times the claw back amount when executive decisions result in patient harm or fatality following changes in ownership or control. Furthermore, the legislation addresses private equity and Real Estate Investment Trust (REIT) investment models by restricting sale-leaseback arrangements, enhancing transparency in ownership and finances, and limiting tax benefits related to REIT participation in healthcare. The primary objective is to limit the control of profit-driven entities over hospitals, nursing homes, and other providers.
Key Provisions
Criminal and Civil Penalties: Establishes new federal prison terms of up to six years for executives whose mismanagement results in patient harm at healthcare facilities.
Compensation Claw Backs: Enables the Department of Justice and state attorneys general to recover up to ten years of executive compensation after events such as bankruptcy or severe financial distress.
Transparency and Limits: Requires reporting on mergers, acquisitions, and debt, while restricting REIT participation in healthcare financial structures.
Profit Regulation: Regulates behaviors tied to profit maximization, including staffing reductions, overbilling, and up-coding, with particular focus on companies backed by private equity.
Take Back Our Hospitals Act
Introduced on March 23, 2026, by Senator Chris Murphy (D-Conn.) and Representative Mary Gay Scanlon (D-Pa.), the Take Back Our Hospitals Act prohibits Medicare payments to hospitals or skilled nursing facilities “owned or controlled” by a “covered firm” or its affiliates. The term “covered firm” encompasses private equity funds, corporations owned or controlled by such funds, and REITs.
Key Components of the Act
Medicare Ban: Blocks Medicare reimbursements to hospitals or skilled nursing facilities owned or controlled by private equity funds or affiliates, eliminating a substantial revenue channel.
Definition of Ownership: Provides a broad definition of control, including ownership of ten percent or more of voting securities, specifically targeting private equity holdings and REITs engaged in sale-leaseback transactions.
Scope: Seeks to “ensure” patient safety and diminish private investment in American healthcare, reinforcing supporters’ assertions that financial interests should not determine access to critical medical care.
Background and Rationale
Presently, over 400 hospitals and nursing homes in the United States are under private equity management—a trend supported by research correlating such ownership with unfavorable outcomes for both patients and staff. Per the bill’s authors, facilities acquired by private equity often experience service reductions, decreased staffing and supplies, and increased charges, alongside declining care quality. There are documented increases in infection rates and complications in private equity-owned hospitals, as well as an 11% rise in mortality among elderly patients in private equity-owned nursing homes. Critics contend that private equity firms employ a strategy of acquiring, stripping assets, and quickly reselling facilities for profit, ultimately affecting patients and communities adversely.( Note: There are also studies supporting a positive impact of PE ownership in these facilities as well such as improved capital access leading to improved facilities, equipment, and staff wages.)
Stop Medical Profiteering and Theft (Stop MPT) Act
Introduced in October 2025 by Senators Markey, Sanders, and Blumenthal, the Stop MPT Act seeks to regulate predatory sale-leaseback arrangements between health systems and REITs. The legislation prohibits transactions deemed detrimental to the financial stability of healthcare entities or compromising patient care, and strengthens the Department of Health and Human Services’ oversight regarding corporate ownership.
Key Aspects of the Stop MPT Act (S. 2989)
Focus on Sale-Leasebacks: Restricts arrangements whereby REITs purchase hospital properties and lease them back, potentially resulting in unsustainable rent and facility closures.
Preventive Action: Prohibits health systems from entering sales or leases with REITs if such agreements threaten their financial viability or public health.
Enhanced Oversight: Grants expanded authority to HHS to review and regulate these transactions.
Applicability: Applies to hospitals, physician practices, skilled nursing facilities, hospice providers, and behavioral health providers.
Goal: Protects patients and communities from practices that prioritize corporate profits at the expense of care standards, addressing crises reminiscent of those triggered by Steward Health Care.
This Act followed investigations into high-debt REIT transactions, with specific reference to Medical Properties Trust as an example of transactions destabilizing healthcare providers.
Health Over Wealth Act
In 2024, Senator Edward Markey introduced the Health Over Wealth Act to address private equity investment in healthcare organizations by promoting transparency, strengthening governmental oversight, and regulating for-profit investment. The bill includes several principal provisions:
Reporting Requirements
Providers owned by private equity or other for-profit investors offering Medicare-covered services, including hospitals, hospices, nursing homes, and related facilities, must submit annual reports to HHS detailing:
- Debt levels
- Fees collected by private equity firms
- Dividends paid to private equity funds
- Lobbying and political spending
- Sale-leaseback agreements
- Real estate, mortgage, and lease payments
- Interest paid on credit lines
- Transactions with vendors or service providers
- Staffing data, including staff-to-patient ratios, job postings, and vacancy rates
- Bed usage and capacity (for hospitals)
- Facility closures in the preceding year
Accountability Measures
The Act directs HHS to implement policies to mitigate risks associated with for-profit ownership, including:
- Establishing escrow accounts to fund operations and capital expenses for five years following closures or service reductions, covering contract obligations and supplementing community health resources.
- Mandating minimum capital investments in acquired entities.
- Requiring financial contributions to offset adverse impacts of closures, reduced services, understaffing, or diminished care quality or access.
Approvals and Licensure
Entities seeking to sell to or lease from a REIT must undergo HHS review, which can prevent agreements considered financially destabilizing or detrimental to public health. Private equity firms must obtain a license to invest in healthcare entities, subject to revocation for noncompliance or abusive conduct.
Task Force and Market Oversight
The Act establishes a task force led by HHS to monitor marketplace developments, restrict private equity activity, and identify practices such as price gouging, understaffing, and access barriers. HHS receives authority to block private equity acquisitions of voting securities and suspend mergers or acquisitions pending review.
Closures
Hospitals receiving Medicare must notify HHS at least 180 days prior to discontinuing services or closing. This enables HHS to assess impacts on essential services and requires submission of mitigation plans supporting continued access and assisting affected employees, with a period for public comment.
Tax Treatment of REITs
The bill seeks to discourage real estate sales undermining long-term healthcare stability for short-term profits, specifically addressing tax loopholes for REITs related to rental income from healthcare properties.
Healthcare Ownership Transparency Act (HOT Act)
Introduced in 2023 by Representative Pramila Jayapal, the Healthcare Ownership Transparency Act (H.R.1754) seeks to improve transparency and oversight concerning private equity and corporate ownership in healthcare. The legislation requires Medicare-participating providers to disclose comprehensive debt, asset, and ownership information, facilitating greater scrutiny of consolidation effects on cost and care quality.
Key Aspects of the HOT Act
Mandatory Disclosure: Requires healthcare entities to report private equity ownership, including partner identities, debt, and fee structures, especially through the CMS Provider Enrollment, Chain, and Ownership System (PECOS).
Targeting Private Equity: Providers controlled by private equity must disclose the percentage of equity contributed by fund partners.
GAO Study & Task Force: Directs the Government Accountability Office to investigate the effects of private equity on healthcare quality and costs, and instructs HHS to establish a task force to potentially limit private equity sector involvement.
Merger Control: Permits HHS to temporarily halt mergers or acquisitions involving private equity in certain healthcare sectors during investigations of abusive practices.
Context and Related Efforts
Rationale: The bill sought to respond to increased closures of private equity-owned healthcare facilities, as seen in Chicago, and aims to address associated impacts on care accessibility.
State-Level Action: Multiple states are considering or have enacted similar legislation, often based on templates from the National Academy for State Health Policy (NASHP), to strengthen attorney general oversight of mergers involving private equity.
Transparency Goals: The legislation intended to clarify ownership and control structures of hospitals and physician practices for regulatory bodies and the public.
There is no doubt in my mind that continued legislative efforts will come forward in Washington, particularly on behalf of Democrat politicians. As we’ve seen at the state level in states like Massachusetts, New York and California (and others), there is a definite distaste for private investment/private equity ownership in healthcare, perhaps some deserved via ill-prepared operators and equity funds. Overall, however, private equity ownership of non-governmental hospitals is small – about 8%. More expansive investment has recently occurred in physician practices and non-nursing home, senior living.
A decent article on PE investment in physician practices mainly, is available here Growth of Private Equity and Hospital Consolidation in Primary Care and Price Implications | Health Policy | JAMA Health Forum | JAMA Network