April 18, 2024
On April 8, the House Commerce Committee held an informational hearing on legislation that would prohibit private equity companies and real estate investment trusts from acquiring or increasing control over providers of healthcare services.
“We have all heard about the rising cost of healthcare and the burdens that places on the people we are here to represent.” said Rep. Jessica Hanson, HF 4206’s chief author. “One of the reasons for the rising cost of healthcare and decreased quality of care is the influx of private companies and real estate investment trusts, who are disrupting the fragile cost of care model in our healthcare system today solely to put profits over patients.”
The legislation would put a moratorium on private equity entities from beginning or expanding direct or indirect ownership, financial, or operational control of medical services in the state, without a current end date. Two MMA members testified as individuals in support of the bill: Najaha Musse, DO, a resident at the University of Minnesota, and medical student Hunter Cantrell.
Proponents used nursing homes as an example of the negative impact private equity can have on healthcare, citing research from the Gerontological Society of America that found private equity ownership of nursing homes in Minnesota correlates with worse care and outcomes, as well as higher administrative fees and lower occupancy rates.
Legislators echoed similar concerns with the growing presence of private equity firms in healthcare, but raised concerns over whether the legislation goes too far without a better understanding of unintended consequences, such as further closures or reduced services in some facilities. Additionally, concerns were raised regarding the definition of private equity in the bill, whether it would include individual practice mergers, or a group of physicians purchasing a practice from a colleague. Questions were also raised whether private equity investments may be needed to cover expensive operational costs such as medical supplies or technology.
There was no action taken on the legislation following the committee’s discussion.
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