Committee hears model to expand state oversight of private equity in health care

The committee heard presentations on proposals to increase state oversight of private equity activity in health care, including a model bill that would require prior notice of large transactions, strengthen corporate-practice-of-medicine protections for clinicians and mandate reporting of ownership and control.

Maureen Hensley Quinn of the National Academy for State Health Policy told the panel the model is built from work NASHP began tracking hospital and health system consolidation and private-equity activity and that it bundles three primary policy approaches: enhanced review of material transactions, stronger corporate-practice-of-medicine rules, and ownership/control transparency. "It allows prior notice of a proposed transaction" and, she said, gives a state office a broader lens than antitrust alone to assess effects on cost, access, equity and quality.

The nut graf: supporters said states increasingly need tools to know who controls health-care decisions when private-equity firms, managed-service organizations, real-estate investors or other outside entities buy or manage providers. Advocates and state officials said existing statutes in some states are decades old and may not capture modern transaction forms such as MSOs, PBM arrangements, leasebacks or layered corporate structures.

Supporters described the three main elements in detail. The transaction-review element would require notice to a state authority of proposed mergers, acquisitions or other material changes in control and would allow an administrative office working with the attorney general to review and, in some versions, place conditions on or block transactions. Maureen Hensley Quinn cited Oregon as the longest-running example: Oregon reviews transactions and has principally imposed conditions (for example, a condition to preserve current lines of service for a multi-year period) rather than blocking a deal.

The corporate-practice-of-medicine component would aim to ensure licensed clinicians retain decision-making authority over clinical care and to bar unlicensed entities from controlling medical practices. NASHP’s model would restrict arrangements that transfer authority for billing, diagnostic or treatment decisions away from clinicians, limit dual compensation or control between PC and MSO arrangements, and curb or limit noncompete clauses that prevent employed clinicians from practicing elsewhere after leaving a practice.

The ownership-transparency proposal would require health entities — the model lists group practices, hospitals, nursing facilities and PBMs as examples — to report owners, parent companies, subsidiaries and management-service arrangements, with updates after major ownership changes or on an annual schedule. The model leaves some choices to states, including whether to make reported ownership information public and which agency would hold the data; NASHP presenters said a health department or health commission is a logical place because those agencies already license some health entities.

Sam Peish, introduced as a head policy analyst, said the draft bill the committee discussed (referred to in testimony as H.71) would assign review authority to the Green Mountain Care Board, require private-equity firms to disclose exit plans and financial strategies "in plain language," and give the attorney general explicit enforcement authority. Peish described the issue as urgent: "We're at a crisis state," he said, and argued that enforcement tools and penalties need to be meaningful to deter practices he described as exploitative.

Speakers cited recent state activity. Presenters said Massachusetts, California and Oregon already have transaction-review mechanisms of varying scope; Oregon’s office applies a broad regulatory lens that extends beyond price effects. Witnesses also referenced the Steward Health situation in Massachusetts as a case that prompted scrutiny and said a nurse’s sworn testimony about operations under private-equity control was played (a copy of the testimony/video was discussed during the meeting).

Committee members asked clarifying questions during the presentation. One member asked about a map labeling Vermont as having a "bare prohibition on unlicensed practice of medicine"; Quinn explained the map’s intent was to show variation across states and that Vermont’s existing provisions could be strengthened. Another member asked how effective existing models have been at keeping hospitals open; Quinn said Oregon has not blocked transactions but has imposed conditions, and that the intent of review is transparency and market oversight rather than punitive action.

No formal motion or vote on legislation occurred during the session. Presenters and committee members discussed next steps including continued stakeholder engagement and efforts to craft a consensus bill for a future session. Presenters also noted technical difficulties playing a video intended to include provider testimony, and they said they would provide the recording by email.

Ending: presenters offered follow-up resources, including NASHP’s legislative tracker and a willingness to provide additional state examples and draft language as the committee continues its review.