For the second straight year, New York will consider allowing private investors to operate hospitals in the state.
New York Gov. Andrew Cuomo issued his 2014-15 executive budget, which included a provision that would establish "a private equity pilot program" for state hospitals under close supervision of the New York Public Health and Health Planning Council. According to the proposal, no more than five private business corporations will participate in the pilot, and the corporations must be small — they cannot have more than 35 shareholders and cannot be publicly traded.
The businesses will affiliate with at least one academic medical center or teaching hospital approved by New York's health commissioner. After two years, the state will issue a report on how effective private equity investment has been within New York's hospital and healthcare system.
Last year, Gov. Cuomo proposed a similar pilot program that would have allowed for-profit corporations to own and operate two hospitals in the state. The demonstration projects were seen as a major initiative because under New York law, all owners of a corporation that operate a for-profit hospital must be "natural persons." This essentially prevents investor-owned corporations from owning and operating hospitals.
However, Gov. Cuomo ultimately scrapped the plan because New York state legislators vigorously opposed the proposal.
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