On July 25, 2024, a federal “Health Over Wealth Act” was introduced in the U.S. Senate and House of Representatives.

The bill would amend the Public Health Service Act, requiring the Secretary of Health and Human Services (HHS) to enforce certain transparency, accountability, and other requirements with respect to for-profit corporations that own health care systems.

S. 4804 was introduced by Senator Edward D. Markey (D-Mass), chair of the Health, Education, Labor, and Pensions Committee on Primary Health, and Retirement Security, before being referred to the Committee on Finance. H.R. 9156 was introduced by Representative Pramila Jayapal (WA-07), member of the House Judiciary Subcommittee on Health, Employment, Labor, and Pensions.

The legislation would do the following:

• Transparency: Require private equity-owned health care facilities to publicly report on their debt and executive pay, lobbying and political spending, health care costs for patients and insurance plans, reductions in services, wages, or benefit, and more.
• Protections for Patients and Health Providers: Require private equity-owned firms to set up escrow accounts to ensure continuation of care in the event of a hospital closure or service reduction.
• Investment Licenses: Require private equity firms to obtain a license from HHS before investing in health care entities. HHS may revoke investment licenses from private equity firms that price gauge, understaff facilities, or reduce access to care.
• REITs: Require health care entities who wish to sell or lease from Real Estate Investment Trusts (REITs) to submit to review if the sale would mean the entity is weakened financially or public health is at risk.
• Accountability: Establish a task force to review the role of private equity/consolidation in health care.
• Assets, Quality, Safety: Prohibit private equity firms from stripping assets from health care entities or undermining the quality, safety, or access to health care.
• Tax Loopholes: Close tax loopholes for REITs rental income from health care entities in order to disincentivize health care entities from selling their property.

The legislation would provide for civil monetary penalty of up to $10,000 per violation of the act; as well as penalties to the violator’s investment license.

Takeaways

As we wrote in Spring 2024 regarding various state initiatives, this federal legislation is the latest in a trend that makes investment by private equity firms in health care more challenging (see, e.g., our blog on an Indiana law, a failed Connecticut bill; a failed Minnesota bill; and a California bill) following a few highly publicized issues. As we wrote in our blog on the still-pending California legislation, providers and sponsors who may be impacted by proposed federal or state legislation should consider how to demonstrate that future transactions would not have adverse competitive effects, would not adversely affect access to health care, and how the transaction would benefit stakeholders and the public. Supporting data should be gathered and tracked. For additional information about the issues, or if you have questions or concerns about this or related proposed legislation, please contact one of the authors or the Epstein Becker Green attorney who regularly handles your legal matters.

Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.