Bill to better protect Maine hospitals from being bought up by private equity firms passed by the Legislature
AUGUSTA – LD 2201, a bill recommended by the Commission on Hospitals and Health Care to better protect hospitals from being purchased by private equity companies, hedge funds or management services organizations passed unanimously in the Senate on Wednesday, following a unanimous vote in the House of Representatives.
“In many places across the country, local hospitals have been bought, gutted and closed down by private equity firms, who squeeze out every scrap of profit for their shareholders and leave people without access to care,” said Sen. Mike Tipping, D-Orono. “At the same time, we’ve seen that state law can make a difference in preventing the worst outcomes of these private equity practices. We need similar protections here in Maine, and I hope this bill can act as a safeguard against some of these threats to our hospitals and our health.”
“Private equity companies can often be focused solely on profits, turning health care into a commodity,” said Rep. Michelle Boyer, D-Cape Elizabeth. “Across the country, we’ve seen firms buy hospitals, cut services and flip them for profit – leaving patients and their communities at risk. This measure provides critical oversight to help make progress and ensure that hospitals put patients first, not profits.”
This past fall, Sen. Tipping and Rep. Boyer chaired the Commission to Evaluate Regulatory Review and Oversight of Health Care Transactions That Impact the Delivery of Health Care Services in the State, from which this bill was one recommendation.
LD 2201 establishes a process for the review and approval of transactions when a private equity company, hedge fund or management services organization acquires a majority ownership or assumes operational control of a health care entity.
Overall, the Commission worked on 14 recommendations for the full Legislature to consider, including potential changes related to:
- the Certificate of Need Program
- the regulatory oversight over health care transactions
- the role of private equity investment in health care
Additionally, the Commission made potential recommendations with a broader scope, including recommending that the Legislature re-establish statewide health care services planning. A majority of the members recommend a prohibition on provider non-compete clauses and non-disparagement clauses in contracts with licensed health care professionals.
The final report is available online here. All of the Commission’s work can be found online here.
Other members of the Commission included health care stakeholders such as representatives of the hospital industry, long-term care and nursing home facilities, health insurance consumers, health insurance carriers and health care purchasers.
LD 2201 now goes to the Governor’s desk, where she has 10 days to sign it, allow it to become law without her signature or veto it.
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