Legislative commission recommends tighter oversight of health-care transactions and several statutory changes

A legislative commission tasked with studying health-care transactions presented a broad set of recommendations to the Joint Standing Committee on Health Coverage, Insurance and Financial Services, urging changes to Maine law to improve oversight of ownership changes, protect clinical judgment, and preserve rural access.

The Commission to Evaluate the Scope of Regulatory Review and Oversight over Health-care Transactions — convened after bills last session addressing private-equity purchases, certificate-of-need (CON) reforms and market oversight — recommended multiple statutory changes and procedural updates. Representative Michelle Boyer, one of the commission chairs, said the group aimed for "actionable recommendations" that could be advanced this session.

Why it matters: Commission members told the committee they found practices elsewhere that contributed to hospital financial distress and closures, including sale-and-leaseback transactions and purchases that saddle facilities with high debt. Several recommendations aim to give state regulators earlier information and discretion to protect consumers and providers.

Key recommendations and details

- Raise and index CON threshold for new facilities: The commission unanimously recommended increasing the monetary threshold that triggers CON review for establishing a new health-care facility and indexing that threshold to the medical-care CPI. Presenters noted the unindexed $3,000,000 threshold is outdated; a staff calculation cited in the meeting placed the indexed value "a little over $4.2 million" for the current year. The commission proposed making the threshold adjustable annually.

- Require notice to the Maine Attorney General: The commission proposed that when a health-care entity provides federal premerger notification to the Federal Trade Commission, the same notice should be provided to the Maine Attorney General. Presenters noted the Attorney General's office currently has limited antitrust staffing.

- Develop a regulatory review process for private-equity and similar transactions: The group recommended consideration of a statutory process for review and approval when private-equity firms, hedge funds or management-service organizations acquire majority ownership or operational control. That measure passed by majority vote but was not unanimous; some commission members worried it could duplicate existing CON review.

- Target specific ‘‘worst practices' ": Rather than ban private-equity investment broadly, the commission recommended prohibiting particular practices tied to harm, including sale-and-leaseback arrangements in which a private-equity firm or REIT would buy a hospital's main campus and lease it back to the provider. The commission also suggested prohibiting transactions with debt-to-equity ratios greater than 50 percent.

- Protect clinical judgment and staffing: The commission proposed prohibiting persons from interfering with the professional judgment of licensed clinicians and recommended exploring statutory protections that would address interference with clinical decision-making and billing practices.

- Codify 120-day notice for maternity unit closures: The commission recommended converting existing voluntary Department of Health and Human Services guidance into statute to require at least 120 days' notice to the licensing division before permanent closure or a change in maternity/newborn service levels.

- Prohibit certain contract clauses and study long-term care needs: Recommendations include prohibiting noncompete and nondisparagement clauses in contracts with licensed health professionals and forming a task force to study long-term-care bed demand and capacity across the state.

Implementation and next steps

Commissioners presented draft, narrowly scoped pieces of legislation for items they judged most likely to move quickly. Senator Mike Tipping, the commission cochair, said the report is the product of five commission meetings, expert presentations, and public testimony. He told the committee the commission intentionally focused on specific practices that have been linked to closures and called for further legislative discussion about which recommendations to pursue and how to allocate enforcement resources.

Quotes from the hearing

"We decided not to pursue the idea of a general moratorium on all purchases by private equity," Senator Mike Tipping said, "instead looking at transparency measures and targeting 1 or 2 worst practices we are most concerned about."

Representative Michelle Boyer added: "The CON unit is, frankly, very small — we learned it's essentially one full-time individual — so if we expand the scope of review, we should provide the resources needed to implement it."

What the report did not resolve

The commission recommended expanding CON review to consider affordability and accessibility impacts for consumers but did not fully flesh out how those concepts would be defined or operationalized. Commissioners also diverged on whether to add broad new regulatory authority beyond CON or to fold oversight into existing programs.

The committee will review the report, the draft legislative language and the appendices provided by the commission before deciding which proposals to advance. The chairs said they expect the committee to consider some narrower bills first to allow for faster action during the session.

Ending

The committee accepted the presentation and invited members to comment and examine draft legislation. No committee votes were taken on the commission's recommendations during the presentation; members asked follow-up questions about implementation, staffing, and overlap with existing CON authority.