Sen. Markey introduces updated bill on PE-owned health care companies
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On Thursday Sen. Ed Markey (D-Mass.) and Rep. Pramila Jayapal (D-Wash.) introduced an updated version of the Health Over Wealth Act, legislation that would take aim at private equity firms and for-profit companies that own health care businesses.
Why it matters: Private equity ownership of health care companies is under the spotlight, especially the firms' practices around worker treatment and cost-cutting.
Case in point: Following a bipartisan announcement last week, the Senate committee voted later that morning to subpoena Ralph de la Torre, the CEO of Steward Health Care.
- The company was previously owned by Cerberus and filed for bankruptcy in May.
State of play: A discussion draft of the bill was introduced in April. Since then, its sponsors have added requirements to disclose agreements with union-busting organizations, increased the penalties for violating the act, and banned health investors "from taking actions that would strip assets from health care entities or otherwise undermine quality, safety, and access to care," per an announcement from Markey's office.
- The bill also calls for prioritizing workers in bankruptcy payouts and requires bankruptcy courts to access health care and employment in their decision-making.
Catch up quick: Steward Health Care was created by PE firm Cerberus after it purchased the Caritas Christi Health Care system from the Catholic Archdiocese of Boston in 2010.
- It then went on an acquisition spree that eventually turned Steward into the country's largest private for-profit hospital chain.
- Cerberus began to exit in 2020 and reportedly made $800 million in profit, but the health care company got into financial troubles that in part began while Cerberus was still in charge.
- The Biden administration, Congress, and Massachusetts officials have been probing the situation.
Zoom out: Earlier this week, the American Federation of Teachers — whose members participate in pension funds managing trillions of dollars in assets — cited Steward as a case study of what not to do, in a new report focused on the labor practices of PE-owned companies.
The bottom line: Private equity's business practices have long had critics, but Steward Health Care seems to have spurred all corners of Washington to do something.
