{"id":4699,"date":"2024-10-05T22:41:02","date_gmt":"2024-10-06T05:41:02","guid":{"rendered":"https:\/\/abovecloud.xyz\/?p=4699"},"modified":"2024-10-05T22:41:19","modified_gmt":"2024-10-06T05:41:19","slug":"private-equitys-role-in-us-healthcare-remains-unchecked-after-california-veto","status":"publish","type":"post","link":"https:\/\/abovecloud.xyz\/?p=4699","title":{"rendered":"Private equity\u2019s role in US healthcare remains unchecked after California veto"},"content":{"rendered":"\n


Bill rejected by Newsom would have let attorney general deny mergers after recent scandal involving Stewart Health<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n


Hopes to rein in private equity investment in healthcare died in California last weekend, as a nationally watched bill was vetoed by the Democratic governor,\u00a0Gavin Newsom<\/a>.<\/p>\n\n\n\n

The bill was the nation\u2019s most high-profile legislative effort to regulate such investments in healthcare, and would have<\/a> given the state attorney general discretion to deny mergers.<\/p>\n\n\n\n

Its demise comes amid US Senate hearings<\/a> over mismanagement at Steward Health, a chain of more than 30 private equity-backed hospitals in Massachusetts whose CEO and investors siphoned \u201chundreds of millions\u201d<\/a> of dollars from community hospitals even as they developed one of the worst patient care records in the country<\/a>.<\/p>\n\n\n\n

\u201cWe\u2019re really disappointed to see this bill was vetoed,\u201d said Katie Van Deynze, a legislative advocate for Health Access\u00a0California<\/a>, a consumer advocacy coalition that lobbied in favor of the bill. \u201cThere are a lot of other states and folks who were watching this.\u201d

The bill received an endorsement<\/a> this summer from Lina Khan, chair of the Federal Trade Commission, the agency responsible for enforcing antitrust regulations. A dozen other US states, including red states such as Indiana, either have merger review laws on the books or considered similar legislation this year.<\/p>\n\n\n\n

Private equity investors have gained an enormous foothold in American healthcare in the last decade, buying up $1tn<\/a> worth of physician practices, hospitals, specialty practices and even hospice centers<\/a>. California alone has seen $20bn in private equity investment<\/a>.<\/p>\n\n\n\n

The bill, formally known as AB 3129, would have required private equity and hedge fund-backed buyers of certain healthcare businesses to seek the state attorney general\u2019s approval 90 days before a deal was slated to close, and given the attorney general the option to deny such mergers. The bill would have also prohibited investor-owners from interfering with professional medical judgment of providers from dentists to psychiatrists<\/a>, strengthening so-called corporate practice of medicine laws.<\/p>\n\n\n\n

That kind of power could have altered the playing field for regulators, who often have little power to challenge mergers until organizations grow into behemoths or display anticompetitive behavior.<\/p>\n\n\n\n

In response to a request for comment, the private equity lobbying group the American Investment Council directed the Guardian to a statement saying it \u201capplauds\u201d the Newsom veto.<\/p>\n\n\n\n

\u201cOur coalition worked hard to ensure California leaders recognize and support private equity\u2019s essential role in improving health care in California,\u201d the statement said. \u201cThe Governor\u2019s well-reasoned decision will help patients and communities continue to have access to quality care.\u201d

In a letter explaining the veto, Newsom said: \u201cI appreciate the author\u2019s continued efforts and partnership to increase oversight of California\u2019s healthcare system\u201d. However, he argued that a recently created state agency should instead oversee healthcare consolidation. \u201cFor these reasons, I cannot sign this bill.\u201d<\/p>\n\n\n\n

Newsom is an important surrogate for Vice-President Kamala Harris, who has a track record of critically examining such consolidation in healthcare. As attorney general of California, Harris intervened to stop mega-mergers and oversaw settlements against major players<\/a>, such as Quest Diagnostics laboratories and McKesson, a medical supplies behemoth.<\/p>\n\n\n\n

Private equity investment received special scrutiny this year as the indignities of patients at Steward Healthcare have come to light, following an investigative series by the Boston Globe<\/a>. At Steward, reporters and now legislators have documented how investors extracted hundreds of millions of dollars from hospitals, even as many lacked staff and basic supplies.<\/p>\n\n\n\n

In recent testimony<\/a> before the US Senate health, education, labor and pensions committee, a nurse recounted how the hospital was so stingy that it lacked \u201cbereavement boxes\u201d, containers specially designed for infants\u2019 remains.<\/p>\n\n\n\n

\u201cSteward didn\u2019t pay the vendor and there weren\u2019t any bereavement boxes,\u201d said a former Steward nurse, Ellen MacInnis, as she paused to gather emotions. \u201cAnd nurses were forced to put babies\u2019 remains in cardboard shipping boxes.\u201d<\/p>\n\n\n\n

At the same time, academic research is beginning to reveal the disadvantages such ownership structures appear to present for patients. Patient care, \u201cis intrinsically a human endeavor, it is intrinsically an art practiced with a bond of trust ideally between a patient and a clinician\u201d, said Dr Zirui Song, a professor of healthcare policy at Harvard University and a general practitioner at Massachusetts general hospital.<\/p>\n\n\n\n

Song was lead author of a 2023 Jama study examining private equity-owned hospitals. The research studied preventable injuries and illnesses in more than 662,000 hospitalizations<\/a> at 51 private equity-backed hospitals. Researchers compared those hospital stays with 4.1m hospitalizations at 259 control hospitals. All of the data was derived from Medicare, the federal public health insurance program covering people older than 65 and the disabled.<\/p>\n\n\n\n

Researchers found a more than 25% increase in incidents such as falls and infections of central lines, tubes inserted near the heart to deliver medicine, fluids and nutrition. That happened even though private equity-backed hospitals tended to admit more socioeconomically advantaged patients.<\/p>\n\n\n\n

\u201cWe should be seeing fewer complications and yet we\u2019re seeing an increase in complications,\u201d said Song. Increased charges and billing, another well-documented strategy firms use to extract profit, are ultimately paid by \u201csociety as a whole\u201d, because healthcare is primarily financed through taxes and wages foregone by employees who receive private insurance.<\/p>\n\n\n\n

\u201cThis bill was fought at every point by mostly the private equity folks, but also others that didn\u2019t want any of their investment opportunities hamstrung,\u201d said Rachel Linn Gish, communications director at Health Access California. For instance, the state\u2019s hospital association opposed AB 3129 even after lawmakers exempted hospitals from the oversight, Van Deynze said.<\/p>\n\n\n\n

\u201cOur argument has always been: we\u2019re not preventing private equity from buying hospitals and doctors\u2019 offices,\u201d said Gish. \u201cAll we want is to make sure there\u2019s not going to be a decrease in access and increase in price \u2026 If you continue to provide good and quality healthcare you shouldn\u2019t face any issues.\u201d

Reprinted from \u201cThe Guardian”<\/p>\n","protected":false},"excerpt":{"rendered":"

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