Two Senate Democrats have introduced a bill that would create a new criminal penalty for private equity executives who “loot” healthcare entities like nursing homes and hospitals.
Under the Corporate Crimes Against Health Care Act, introduced June 11 by Sen. Elizabeth Warren, D-Mass., and Sen. Ed Markey, D-Mass., executives “whose actions contributed to a triggering event that results in the death or injury of a patient or patients” will face up to six years in prison.
Related: How private equity could be affecting patient safety in hospitals
The bill also provides state attorneys general and the Department of Justice with the power to claw back all compensation, including salaries, issued to private equity and portfolio company executives within a 10-year period before or after an acquired healthcare firm “experiences serious, avoidable financial difficulties due to that looting,” according to a bill summary. Moreover, it would authorize an associated civil penalty of up to five times the clawback amount.
Over the last decade, private equity fund assets have more than doubled, totaling $8.2 trillion in 2023, according to data from McKinsey & Co. cited in the senators’ news release.
“When private equity gets hold of healthcare systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences,” Warren said in a statement.
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The Massachusetts senators said that private equity “greed and mismanagement” drove Steward Health Care, which operates eight hospitals in Massachusetts, into bankruptcy.
“Private equity firms and their enablers will continue to steal from America’s healthcare system to feed their corporate greed unless we stop them,” Markey said in a statement. “We need guardrails now to guarantee CEO wealth doesn’t come before the public’s health.”
Of note, Markey in April released a discussion draft for his bill, the Health over Wealth Act. Among that bill’s provisions, it would require healthcare entities owned by private equity to report additional information, such as fees collected by the private equity firm; dividends paid by the healthcare entity to the private equity fund; lobbying or political spending by the private equity fund and healthcare entity; and staffing information at the healthcare entity.
Separately, federal regulators — the Federal Trade Commission, the Justice Department and the Department of Health and Human Services — are examining acquisitions by private equity companies in the healthcare sector. The regulators issued a request for information in March to obtain public feedback on the matter, and the comment period closed June 5.
