HB 7224, An Act Expanding Liability Under The False Claims Act For Entities With An Ownership Interest And Prohibiting The Licensing Of Hospitals With Certain Lease Back Arrangements

TESTIMONY OF THE CONNECTICUT HOSPITAL ASSOCIATION
SUBMITTED TO THE GOVERNMENT ADMINISTRATION AND ELECTIONS COMMITTEE

Friday, March 21, 2025

The Connecticut Hospital Association (CHA) appreciates this opportunity to submit testimony concerning HB 7224, An Act Expanding Liability Under The False Claims Act For Entities With An Ownership Interest And Prohibiting The Licensing Of Hospitals With Certain Lease Back Arrangements.

Connecticut hospitals and health systems care for patients, strengthen the state’s economy, and support vulnerable communities across the state. Every day, they work to improve healthcare access, affordability, and health equity. Even as they face ongoing challenges, hospitals provide world-class care to everyone who walks through their doors, regardless of their ability to pay. Hospitals also support an exemplary workforce as the largest collective employer in the state, contribute significantly to the state’s economy, and invest in their communities addressing social drivers of health.

HB 7224 would require prior notification to the Attorney General and the Commissioner of the Office of Health Strategy (OHS) of any arrangement where the main campus of a hospital is proposed to be leased from a healthcare real estate investment trust (REIT). Additionally, the legislation would prohibit the Commissioner of the Department of Public Health (DPH) from issuing or renewing a hospital license should the commissioner find that the main campus of the hospital is leased from a healthcare REIT.

The use of a lease-back arrangement by a hospital operator whereby the property on which the hospital sits is sold to a healthcare REIT and then leased back to the hospital has not served patients well in our state. Instead of being used to support the operation of the hospital, the profits from the sale have been used to support a corporate parent and the lease-back arrangement has put enormous financial strain on the hospital.

We support the bill’s additional scrutiny of these arrangements and the general supposition that they are, at the end of the day, often detrimental to the long-term viability of a hospital. We also believe that financial arrangements should be viewed on their individual merits and outright bans tend to not only forgo bad arrangements but potentially beneficial ones as well. It’s why we ask that the legislation be modified to give the DPH Commissioner, in consultation with the Attorney General and OHS Commissioner, some flexibility in licensing, which the underlying bill does not currently provide. While the burden of proof should be high and should fall on the transacting parties to describe the benefit of an arrangement to the hospital and community it serves, discretion should be provided to the commissioner to act in the best interest of healthcare delivery in the state.

We appreciate the committee’s attention to this issue.

Thank you for your consideration of our position. For additional information, contact CHA Government Relations at (203) 294-7301.