Massachusetts Sens. Elizabeth Warren and Ed Markey have introduced the Corporate Crimes Against Health Care Act of 2024 in an attempt to remove "corporate greed and private equity abuse" in healthcare.
In a June 11 joint press release, Ms. Warren and Mr. Markey shared how private equity fund assets have more than doubled, hitting $8.2 trillion in 2023 and pointed to how lax corporate transparency and accountability laws have allowed private equity to harm nursing homes, provider practices, hospitals and other healthcare entities.
Dallas-based Steward Health Care's financial woes were also mentioned. The 31-hospital health system, which has facilities in Massachusetts, filed for bankruptcy on May 6 and is attempting to offload its hospitals and physician group, Stewardship Health.
"My Corporate Crimes Against Health Care Act would prevent what happened with Steward from ever happening again," Ms. Warren said in the release. "When private equity gets hold of health care systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences."
Here are seven things to know about the Corporate Crimes Against Health Care Act of 2024:
1. The act would result in criminal penalty of up to six years in prison for executives who loot healthcare organizations like hospitals and nursing homes should that looting result in the death of a patient.
2. The Justice Department and state attorneys general would have the ability to take back all compensation from private equity and portfolio company executives, including salaries, in a 10-year period before or after a healthcare firm they have acquired experiences avoidable financial issues due to their actions.
3. An associated civil penalty could be authorized of up to five times the clawback amount under the act.
4. Federal health program payments to entities that sell assets or use them as REIT loan collateral could be banned, apart from existing arrangements, under the act. The Tax Code rule that allows taxable REIT subsidiaries to sway healthcare operations could also be repealed. The act would also cut 20% pass-through deduction, which was passed in the 2017 Trump tax cuts, for REIT investors.
5. Healthcare providers who receive federal funding would be required to publicly report mergers, acquisitions, financial data, like debt and debt-to-earnings ratio, and changes in control and ownership.
6. An HHS OIG report to Congress would also be mandated on the harms that corporatization causes in healthcare.
7. "They promised to improve health care, but instead traded lives and livelihoods for profit. Private equity firms and their enablers will continue to steal from America's healthcare system to feed their corporate greed unless we stop them. We need guardrails now to guarantee CEO wealth doesn't come before the public's health," Mr. Markey said in the release.