Massachusetts law aims to prevent repeat of Steward Health Care crisis
Private equity firms that invest in hospitals will now face tighter regulations in Massachusetts under a new law signed by Gov. Maura Healey on Wednesday, after an ownership scandal at nine of the state’s hospitals exposed significant risks to patient care .
The new law would bring greater transparency to opaque financial transactions between hospitals and the investment groups that own them. Healey signed the agreement before the end of this year’s state legislative session.
The law would increase financial penalties for hospitals, private equity investors, real estate investment trusts and other entities that fail to submit required financial reports to the state on time. Fines for failing to submit information on time will jump from $1,000 to $25,000 per week, and the law also removes the $50,000 annual cap.
The attorney general’s office and the Massachusetts Health Policy Commission will also gain increased investigative powers over private equity transactions, and the commission will have the authority to request testimony from private equity investors and health care real estate trusts about pricing, financial stability and ownership structures.
The law is a victory for the state after their owner, Dallas-based Steward Health Care, declared bankruptcy and two hospitals closed last year. Steward owns more than 30 hospitals across the country and is one of the largest hospital operators in the state.
For two years, CBS News investigation Harmful Influence That private equity ownership could help U.S. hospitals, especially those serving high-need and low-resource areas. although housekeeper hospital Despite his troubles, CBS News found evidence of CEO Ralph de la Torre’s extravagant spending, including the purchase of a $40 million yacht in 2021 and in 2022 Purchased a Texas horse ranch worth $7 million and two business jets worth $95 million.
Healey said in a news release that the new law will “close loopholes in our regulatory process so that for-profit health care providers like Steward Health Care can abide by the same transparency rules as nonprofit providers.” She added, “As Attorney General, I spent years in court trying to hold Stewart to this standard, and I am pleased that our laws will no longer be exploited in this way.”
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The law would also prohibit the Department of Public Health from issuing a license to build or maintain an acute care hospital that leases its main hospital from a real estate investment trust — a tactic favored by the private equity industry that Stewart has used to siphon off funds. from direct patient care.
“Before Steward Health Care ultimately collapsed, executives spent years hiding their financial information from state regulators, putting patients and our health care system at risk,” said state House Speaker Ronald J. Maria Ronald J. Mariano said at a press conference. “That’s why it’s so important to ensure our institutions have the ability to monitor health care conditions and guard against trends and transactions that drive up costs without improving patient outcomes.”
CBS News contacted Steward Health Care about the new legislation, and a representative said the company had no comment.
Earlier this week, the U.S. Senate Budget Committee Released a scathing 162-page report Two private equity firms put patients at risk by trying to squeeze profits from other hospital companies in underserved communities.
“As our investigation shows, these financial entities put their own profits ahead of patients, resulting in health and safety violations, chronic staffing shortages and hospital closures,” said the Rhode Island Democratic senator who is leading the investigation with the senators. Councilman Sheldon Whitehouse said. Chuck Grassley, Republican from Iowa.
It comes after another Senate committee took the unusual step in September of voting to remove Steward Health Care CEO de la Torre from the position. contempt of parliament He refused to appear in court after being subpoenaed to testify about the company’s financial failures.
De La Torre has previously denied wrongdoing through a spokesman.
“Dr. de la Torre went to great lengths to help Steward Health Care overcome numerous industry headwinds and challenges, including personally purchasing necessary equipment and supplies to meet patient needs and using his own assets to personally guarantee the company’s loans,” a spokesperson said in a statement stated in the statement.
