Officials fear private equity has harmed patient care in CT. They want to stop it

Hartford Courant – Monday, March 3, 2025
By Livi Stanford

Connecticut lawmakers have introduced several bills to regulate private equity in hospitals and nursing homes, saying such companies may prioritize profits over patient care.

“We have seen how private equity firms have harmed the health and wellbeing of people in our state,” said state Sen. Saud Anwar, Senate chairman of the Public Health Committee. “We have seen how they have harmed radiology services in our state. The bottom line is money focus rather than the care focus of patients.”

The Public Health Committee will soon introduce a new bill to restrict private equity firms from buying hospitals in the state, Anwar said Friday. But the bill would allow private equity in the outpatient setting to have a management agreement with medical groups only if they are in the minority role.

The potential impact of private equity in health care has been on display in Connecticut recently as Prospect Medical Holdings, a private equity company that owns four Connecticut hospitals filed for Chapter 11 bankruptcy.

Prospect, which operates Manchester Memorial, Rockville General and Waterbury Hospital and is based in California, has faced challenges in many of its hospitals in the state, from delayed payments to physicians, vendors, a shortage of health care providers, among other issues.

In 2022, Yale New Haven Health agreed in a tentative agreement to purchase Prospect’s three hospitals for $435 million but that deal has been bogged down in lawsuits and Yale recently said the deal was no longer possible due to “mismanagement.”

A U.S. Senate Budget committee investigation of private equity firms completed late last year found that private equity investment “in health care has negative consequences for patients and providers.”

The committee reviewed documents from Prospect Medical Holdings and other private equity firms.

“Take private equity firm Leonard Green and hospital operator Prospect Medical Holdings: documents we obtained show they spent board meetings discussing profit maximization tactics – cost cutting, increasing patient volume and managing labor expenses – with little to no discussion of patient outcomes or quality of care at hospitals,” said Former Senate Budget Chairman Sheldon Whitehouse , D-RI in a release.

Other state bills on private equity include SB 469, introduced by Sens. Anwar and Jeff Gordon, which would also restrict private equity firms from the acquisition of hospitals and prohibit real estate investment trust transactions involving hospitals.

Further, SB 567, also introduced by Anwar, would expand the authority of the state attorney general and commissioner of health strategy to regulate health care facilities owned by private equity and restrict property transactions deemed as “self-dealing,” according to a release from Anwar.

The Aging Committee held a public hearing on several bills Friday including SB 1332 which would prohibit private equity companies and real estate investment trusts from acquiring or increasing any direct or indirect ownership interest in a nursing home or any operational or financial control in a nursing home beginning in October of this year.

Mairead Painter, the state’s long term care ombudsman, told the Aging Committee Friday that she has seen firsthand the impact private equity firms and large real estate investment trusts have on nursing homes.

“These groups often prioritize profits over the care and service of residents as well as supporting staff,” she said. “The business model that they come in with includes aggressive cost cutting strategies, staffing reduction and focus on short-term financial returns. All of these negatively affect the quality of life, staffing levels and resident outcomes..”

Painter told the Courant Friday that since nursing homes moved away from having one or two owners and a very transparent ownership structure, it has gotten harder to see where all the funds are going.

“I would like to see total transparency on all of that,” she said. “There are financial decisions being made that impact the ability for nursing homes to function at a high quality level, and that does impact nursing home closures.”

Painter said 15 nursing homes have closed in the state since 2021.

State Rep. Michael DiGiovancarlo, D-74, is cosponsoring SB 1332.

DiGiovancarlo, also the Board of Aldermen president in Waterbury, which has faced challenges with private equity in health care at Waterbury Hospital, said the bill would not allow for bloated rents, and the siphoning of money out of nursing homes.

“What I saw in Waterbury was a group of investors that bought the hospital and they turned around and bought all the properties,” he said. “They no longer cared about the hospital and they were paid a tremendous amount of rents that owners siphoned all the money out of the hospital until they ran the hospital into bankruptcy.”

Matt Barrett, CEO and president of the Connecticut Association of Healthcare Facilities, took issue with SB 1332.

“We understand that the Public Health Committee will consider a range of proposals concerning hospital private equity this session but none reflect the outright ban of all such transactions as this proposed for skilled nursing homes,” he said in his testimony to the Aging Committee.

He added that he wanted to challenge the notion that all private equity investments in health care are nefarious with harmful intentions of outcome.

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