On Thursday, prominent Democratic lawmakers introduced the Health Over Wealth Act, a sweeping piece of legislation designed to curb the growing influence of private equity firms in the healthcare industry. The bill, which was introduced by Senator Edward Markey (D-MA) and Congresswoman Pramila Jayapal (D-WA), is a response to increasing concerns that private equity investors, driven by profit motives, are prioritizing financial gains over patient care and the long-term stability of the healthcare system. With this legislation, lawmakers aim to introduce stronger regulations, protect vulnerable patients, and ensure that healthcare is not just another marketable asset for corporate investors to exploit.
At its core, the Health Over Wealth Act seeks to introduce reforms aimed at ensuring that healthcare—particularly in critical areas such as mental health, behavioral health, and addiction treatment—remains focused on providing quality care to those in need, rather than serving as a revenue-generating enterprise for private equity firms. The bill includes a variety of provisions that would limit the power of these firms, enforce greater transparency, and protect the integrity of healthcare services.
The Health Over Wealth Act: Key Provisions
The Health Over Wealth Act is an ambitious bill with several key provisions intended to increase accountability and transparency among private equity-owned healthcare entities. Here are the five primary aims outlined in the legislation:
Increased Transparency and Reporting Requirements
One of the most significant aspects of the bill is its push for increased transparency in the financial operations of private equity-owned healthcare entities. The Health Over Wealth Act would require these entities to disclose critical financial information, such as:
- Executive Pay: The bill aims to make the compensation packages of executives at private equity-owned healthcare organizations publicly available, shedding light on how much the top brass are earning while healthcare services may be suffering from cost-cutting measures.
- Debt Levels: Many private equity firms have been criticized for loading healthcare providers with heavy debt burdens, potentially putting patient care and facility stability at risk. The bill would require healthcare entities to report their debt levels, giving regulators and the public a clearer picture of their financial health.
- Lobbying and Political Spending: The bill also requires reporting on lobbying and political expenditures, ensuring that private equity firms cannot secretly influence policy decisions to further their own financial interests.
- Patient Costs and Reductions in Services: The legislation would require private equity firms to disclose any changes in patient costs, including price hikes, as well as any reductions in patient services or wages for healthcare workers that might compromise the quality of care.
These measures are designed to shine a light on the financial practices of private equity firms, which have often been accused of prioritizing profits over patient outcomes. By requiring greater transparency, the Health Over Wealth Act aims to create a healthcare system that is more responsive to patients’ needs rather than corporate profits.
Financial Safeguards to Ensure Stability in Healthcare
A key provision of the Health Over Wealth Act is its requirement for private equity firms to create escrow funds with enough cash to cover five years’ worth of operating expenses. This financial buffer would be used to hedge against any potential disruptions to care and to ensure that healthcare providers can continue to function even during times of financial instability.
Additionally, the bill mandates that private equity firms must set aside funds for neighboring nonprofit hospitals that may need to take on patients in the event of a financial disruption. This provision is particularly important in maintaining access to care for communities that rely on nonprofit hospitals for treatment.
Furthermore, private equity firms would be required to obtain licenses from the U.S. Department of Health and Human Services (HHS) to acquire healthcare assets. These licenses could be revoked if the firm engages in practices that compromise patient care or lead to financial instability. If a firm’s license is revoked, it would be required to divest its healthcare assets, ensuring that they are no longer controlled by entities that put profits above people.
The Creation of a Task Force to Monitor Private Equity
To further address the rising influence of private equity in healthcare, the Health Over Wealth Act would establish a task force responsible for monitoring and assessing private equity activity in the sector. This task force would be tasked with identifying problematic practices and limiting the influence of corporate investors in healthcare. By having a dedicated body to oversee these activities, lawmakers hope to ensure that healthcare stays focused on its primary mission—providing care to those who need it most.
Protecting Healthcare Quality Against Asset Stripping
One of the most pressing concerns with private equity involvement in healthcare is the practice of asset stripping, where private equity firms sell off valuable assets to generate quick profits, often at the expense of patient care. The Health Over Wealth Act specifically prohibits asset stripping if it undermines the quality, safety, or access to care.
Additionally, the bill would require bankruptcy courts to prioritize the continuation of care when making decisions about the future of a struggling healthcare entity. This means that, in the event of bankruptcy, healthcare organizations would be required to demonstrate a clear plan for maintaining access to quality care during restructuring. This provision aims to prevent the abandonment of communities that rely on these institutions for vital services.
Closing Tax Loopholes for REITs (Real Estate Investment Trusts)
Real Estate Investment Trusts (REITs) have become a common vehicle for private equity firms to profit from healthcare properties. These entities have been able to exploit tax loopholes, paying little to no taxes on rental income generated from healthcare facilities. The Health Over Wealth Act seeks to close these loopholes, ensuring that REITs contribute fairly to the funding of the healthcare system. By closing these tax loopholes, the bill aims to ensure that the financial benefits of healthcare properties remain within the system, rather than being funneled off to investors.
The Steward Health Care Case: A Wake-Up Call
The introduction of the Health Over Wealth Act comes at a time when private equity’s role in healthcare is being heavily scrutinized. One of the key inspirations for the bill is the recent collapse of Steward Health Care, a Massachusetts-based health system that has been working through bankruptcy following years of financial instability. Steward’s downfall is widely attributed to the practices of its for-profit backers, including Cerberus Capital Management, which many critics argue prioritized profits over quality care.
Senator Markey, who represents Massachusetts, has pointed to Steward’s implosion as a prime example of the dangers posed by private equity involvement in healthcare. In light of the company’s financial difficulties, the U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee recently voted to subpoena Steward CEO Dr. Ralph de la Torre, seeking his testimony before federal lawmakers.
This example underscores the growing concern that private equity firms, by placing excessive financial burdens on healthcare organizations, can jeopardize patient care, undermine healthcare workers’ rights, and destabilize vital services. The Health Over Wealth Act is an effort to prevent other healthcare systems from experiencing similar failures.
The Growing Influence of Private Equity in Behavioral Health
The rise of private equity in healthcare has been particularly pronounced in the behavioral health and addiction treatment sectors. Private equity firms have driven about 60% of all dealmaking in the behavioral health field over the past few years. Despite their dominance in transactions, private equity firms still own relatively small portions of the addiction and mental health industries. For example, only about 20% of hospitals are owned by private equity investors, according to the American Hospital Association.
However, even this minority ownership has raised significant concerns. As the private equity model continues to expand in behavioral health, many worry that firms will prioritize profit-maximizing strategies that are not conducive to the long-term wellbeing of patients.
A National Conversation on Healthcare Investment
The Health Over Wealth Act is part of a broader national conversation about the role of private investment in healthcare. Both federal and state officials have expressed concern about the growing influence of private equity in healthcare, and there has been a push for greater transparency and oversight. In fact, earlier this year, the Federal Trade Commission (FTC), the Department of Justice’s Antitrust Division, and the U.S. Department of Health and Human Services (HHS) launched a joint investigation into the growing control of private equity firms in healthcare. Several states have also passed or are considering new laws requiring disclosure of private equity involvement in healthcare deals, which could delay transactions and provide regulators more time to assess their impact.
A Critical Moment for Healthcare Reform
The introduction of the Health Over Wealth Act signals a critical turning point in the battle to protect healthcare from corporate exploitation. As Senator Markey put it, “Private equity firms and greedy corporate executives are using the healthcare system as a piggy bank. We need to put in place permanent guardrails to protect patients, providers, and communities, and that is exactly what the Health Over Wealth Act provides.”
If passed, this legislation could set a powerful precedent for future reforms in healthcare, limiting the ability of private equity firms to prioritize profits over people. As lawmakers, regulators, and the public continue to grapple with the challenges posed by corporate control of healthcare, the Health Over Wealth Act could be an important step toward restoring the focus of the healthcare system to its true purpose: ensuring access to high-quality, affordable care for everyone.
Conclusion
The Health Over Wealth Act is an urgent and necessary legislative effort to prevent private equity from undermining the integrity of healthcare. With its comprehensive provisions aimed at increasing transparency, protecting patient care, and regulating corporate influence, the bill represents a bold step in the fight to keep healthcare focused on people, not profits. While the bill’s passage is far from guaranteed, it signals a growing recognition that the healthcare system must prioritize the needs of patients and communities over the financial interests of corporate investors.
