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State legislatures respond to private equity’s pillaging of hospitals with mixed results

August 29, 2024

Throughout the United States, hospitals that were pillaged by private equity firms in recent years have been experiencing financial distress and patient care issues. Four of these hospitals are slated to close[1] and two have already closed since the start of the year.[2] This is the legacy of the health systems’ former private equity owners who in many cases are now out of the picture – and yet patients, health care workers, and communities around the country have been left to pick up the pieces.

In response to this ongoing crisis as well as the growing evidence of private equity’s harms in healthcare, multiple state legislatures have explored proposals aimed at better regulating private equity’s ownership of hospitals. Despite the momentum of the current moment, many of these attempts have temporarily stalled. Meanwhile, the private equity and hospital industries have been lobbying to avoid strong regulations of their business practices.[3]

This blog post will review the status of former private equity-owned hospital systems: Steward Health Care and Prospect Medical Holdings, as well as Pipeline Health’s former hospitals in Chicago, and discuss the ways various state legislatures are responding to better regulate private equity’s investments in hospitals.

Table of Contents:

 

Massachusetts

Massachusetts is ground zero for the Steward Health Care crisis, where two Steward hospitals are slated to close in August and the state is wresting control of another Steward hospital via eminent domain to ensure it can continue running.[4]

Steward Health Care was owned by Cerberus Capital Management from 2010 to 2020; despite the private equity firm making at least $800 million from its investment in Steward,[5] the multi-state health system has been financially struggling since before Cerberus divested.[6] In recent years, the situation worsened, with the health system declaring bankruptcy in May 2024.[7]

Leading up to the bankruptcy, news stories of Steward’s many issues were surfacing, including unpaid vendors,[8] supply shortages and stockouts,[9] understaffing,[10] repossessed medical equipment,[11] service cuts,[12] and hospital closures.[13]

The pillaging of Steward that contributed to its financial distress was made possible by its partnership with Medical Properties Trust, a real estate investment trust (REIT), that helped finance investor payouts to Cerberus Capital Management as well as Steward’s national expansion by acquiring Steward’s hospital real estate.

Steward executed its original $1.2 billion real estate deal with MPT in 2016, where MPT mortgaged four Massachusetts hospitals and acquired five others. Steward was then on the hook to pay lease and mortgage payments for these hospitals on real estate it used to own. Meanwhile, Cerberus Capital Management collected $484 million in dividends from the sale.[14]

See PESP’s June 2024 report on Steward Health Care to read more about Steward’s pillaging by Cerberus Capital Management and hospital landlord Medical Properties Trust.

The fact that Steward’s real estate is mostly owned by Medical Properties Trust (MPT) has made selling the hospitals’ operations difficult. Because of the separation of operations and real estate, bidders interested in the hospitals have to negotiate with both Steward and MPT.[15] Steward and MPT have required mediation around how to split up proceeds from the sales,[16] and recently Steward sued MPT over how many of the bankruptcy sales have hampered by the complicated process.[17]

The crisis at Steward hospitals has prompted Massachusetts lawmakers to draft legislation that would prevent a similar crisis from happening in the future. In May, the Massachusetts House of Representatives passed comprehensive legislation it described as aiming “to restore stability to the healthcare system, bolster accountability within the industry, and control healthcare spending to ensure that everyone in Massachusetts has access to quality, affordable healthcare.”[18]

The bill included language banning the sale of hospital real estate to real estate investment trusts (REITs) like MPT, as well as language granting the Commonwealth and its regulators much greater oversight powers over private equity, REIT, and other types of investors. [19]

In July, the Massachusetts Senate passed its own version of the healthcare bill to then send back to the House for reconciliation.[20] While both bills have sections that are generally aimed at safeguarding hospitals and other healthcare businesses from harms associated with private equity and increasing oversight of healthcare transactions, the two bills differ in multiple ways, including that the Senate bill would not ban sale-leasebacks of hospital real estate.[21]

Despite the passage of separate legislation in both the House and Senate, the Massachusetts legislative session, which one local news outlet described as “unproductive and contentious,”[22] ended on July 31, 2024, without a reconciled healthcare bill being signed into law by Governor Healey.[23] Ultimately, Massachusetts legislators failed to meet the moment despite the immense momentum that could have been channeled from the Steward crisis unfolding throughout the state.[24]

Connecticut

Prospect Medical Holdings, a safety net hospital system with 16 hospitals across California, Connecticut, Pennsylvania, and Rhode Island,[25] is facing financial distress at many of its locations nearly four years after private equity owner Leonard Green and Partners exited its investment having siphoned hundreds of millions of dollars from the system.[26] As Prospect has been attempting to sell its struggling hospitals in Connecticut to Yale New Haven Health, it has been met with regulatory obstacles and ongoing financial troubles that have held up the potential sale.[27]

The situation is especially dire following a ransomware attack last August that worsened an already troubling financial situation. This development threw a wrench in the prospective deal in which Prospect’s Connecticut hospitals would be acquired by Yale New Haven Health.[28]

In May 2024, Yale New Haven Health sued Prospect, alleging that “Prospect had violated the deal terms by mismanaging facilities, not paying staff and vendors, and failing to implement basic cybersecurity protections,” according to HealthcareDive.[29] Hospital leaders and some legislators fear the imminent closure of these three safety net hospitals if a deal does not go through.[30][31] Like Steward, much of Prospect’s real estate is owned by Medical Properties Trust, including that of the three Connecticut hospitals. The original deal involved Prospect buying back its real estate from MPT for $355 million to then sell both operations and real estate to Yale New Haven Health for $457 million,[32] and so MPT is also part of ongoing negotiations over the disputed deal terms.[33]

Adding to the sale’s troubling future, Prospect is currently the subject of multiple regulatory investigations, including by the Department of Justice, Connecticut Commissioner of Consumer Protection, and Connecticut Attorney General.[34]

The issues surrounding Prospect’s hospitals in Connecticut generated momentum in in the state legislature to pass legislation aimed at better oversight and regulation of private equity and hospitals. However, like in Massachusetts, legislative efforts did not yield the passage of any new laws.

During its 2024 legislative session, Connecticut’s state legislature failed to pass Senate Bill 9, a healthcare reform bill that was aimed at increasing financial oversight of hospitals and revising the state’s certificate of need program.[35] A house bill targeting private equity acquisitions of healthcare facilities[36] passed out of the Joint Committee on Public Health but failed to advance to a larger vote in the House.[37]

Pennsylvania

Like Connecticut, Pennsylvania also has Prospect hospitals (under the name Crozer Health) experiencing the fallout from years of private equity ownership.  Prospect’s failed attempt to sell its four Crozer Health hospitals in 2022 has been followed with layoffs and services cuts,[38] including of 215 employees in early 2023.[39]

In October 2023, the state Attorney General agreed to suspend a lawsuit filed in 2022 related to Prospect’s attempted closure of one of the Pennsylvania hospitals in order to provide a 270-day period for Prospect to sell the Crozer system.[40] In August 2024, Prospect and CHA Partners announced a deal for CHA Partners to acquire the hospitals and convert them to nonprofit status.[41]

CHA Partners describes itself as a “full service real estate company” that specializes in “inventive public-private partnerships.”[42] According to recent reporting from WHYY PBS, CHA Partners received $39 million in grants and loans from a community foundation to support the turnaround of a local hospital in New Jersey, but CHA Partners owes at least $4 million to the foundation, even after selling the hospital. WHYY reports that “the majority of the loan balances were forgiven and the Salem community foundation sued CHA Partners to recoup the rest. They won in court this past May, but…the foundation has yet to receive any payments.”[43] Meanwhile CHA is now moving to acquire more hospitals from Prospect in Pennsylvania.

In recent months, Crozer has ended a surgical residency program and announced plans to shutter the operating room at one of its hospitals.[44] The eastern Pennsylvania communities served by Crozer Health have been negatively impacted for years as a result of Leonard Green’s pillaging of the health system. In 2022 alone, Prospect/Crozer laid off hundreds of workers,[45] shuttered the maternity ward at Delaware County Memorial Hospital,[46] shuttered the hospice unit at Taylor Hospital,[47] and threatened municipalities with severing paramedic services in just 90 days if they didn’t pay up.[48]

Pennsylvania lawmakers have yet to pass legislation that would bring more oversight to private equity ownership of hospitals in the state. This year, there were three separate bills being considered in the state House and Senate that would require specific notification requirements to the state Attorney General’s office for healthcare facilities, systems or providers engaging in certain healthcare transactions. However, the future of the bills is still up in the air; the state legislature is on break until September 16, 2024 and the 2024 session will close on November 14, 2024.[49]

Illinois

Last August, Illinois Governor JB Pritzker signed House Bill (HB) 2222 into law, legislation designed to enhance state Attorney General (AG) oversight of mergers and acquisitions among healthcare entities. This legislation is an important step forward for Illinois to more effectively regulate healthcare transactions that could have the potential to negatively impact communities, patients, and workers.

HB 2222, which was sponsored by 22 Illinois state representatives and 9 state senators,[50] amends the Illinois Antitrust Act, the Illinois Health Facilities Planning Act, and the State Finance Act.[51] The new law requires that healthcare entities provide notice to the AG of any mergers or acquisition activity 30 days prior to the closing or transaction effective date.[52]

The legislation also empowers the AG to request additional information related to the transaction. Under the law, “If the Attorney General requests additional information, the covered transaction may not proceed until 30 days after the parties have substantially complied with the request.” Healthcare entities in violation of these provisions can face a civil penalty of up to a $500 per day until they are back in compliance.[53]

While the new law does not grant the AG power to halt a transaction based on information or new information related to the transaction, it does allow the AG to enforce compliance with the law via civil penalties as well as court action.[54] According to the AG’s office, the new law will “better equip the Attorney General’s office with information necessary to determine whether a proposed transaction warrants an investigation and, when necessary, a challenge for anticompetitive conduct that could substantially lessen competition or harm the public or employees.”[55]

The AG’s enhanced powers come on the heels of recent controversies involving investor-owned hospitals in Illinois. Pipeline Health, owned by investment firms Deerfield Management, Davidson Kempner Capital Management, and Stanton Road Capital, acquired three Chicago-area safety net hospitals in 2019. Despite assuring regulators that it would keep the hospitals open for at least two years following the acquisition, Pipeline promptly moved to close Westlake Hospital in Melrose Park. Community outcry[56] and legal challenges ensued,[57][58] but Pipeline was ultimately able to close the hospital by having it declare Chapter 7 bankruptcy.[59]

During Westlake Hospital’s bankruptcy proceedings, it came out that closing and selling Westlake had been a condition of Pipeline’s purchase agreement with Tenet Healthcare, a critical detail that Pipeline had failed to disclose to regulators.[60]

In 2020, the bankruptcy judge approved the sale of the hospital and hospital campus property to Woodlake Pacific Holdings, LLC and Lakeland Holdings 2020, LLC for $12 million.[61] These holding companies are associated with an investment firm called Cedar Health Group.[62]

Cedar Health calls itself a “privately held opportunist investment and asset management company servicing the healthcare industry” and was founded in 2019 by Mark Tress, Stephen Werdiger and Chaim Rottenberg. The company owns long-term acute care hospitals and behavioral health facilities in Louisiana and Florida.[63]

In April 2021, lawmakers moved to quickly pass legislation that would make it easier to reopen Westlake Hospital by waiving a requirement to secure a certificate of need and instead allowing the new owners to file for a change-of-ownership exemption. However, this change comes with requirements to keep the hospital open for at least 5 years, invest $20 million in the hospital, and adopt a charity care policy that is no less restrictive than what was in place before.[64]

Soon after, Cedar Health Group filed its change-of-ownership exemption application with the Illinois Health Facilities and Services Review board.[65] In October of the same year, the deal closed.[66] The final sale price for the hospital property sold to Woodlake Pacific Holdings, LLC was $7.2 million dollars, with most of the proceeds going to Tenet’s subsidiary, VHS of Illinois, Inc.[67]

The same month, the Chicago Sun-Times published a story about an illegal campaign contribution from a hospital owned by Cedar Health Group in Louisiana to a Cook County judicial candidate. The candidate’s husband (Rep. Chris Welch) had supported the legislation the previous year that helped expedite the regulatory process for Cedar Health’s acquisition and reopening of Westlake.[68]

At the time of this writing (August 2024), it appears that Woodlake Specialty Hospital has not yet opened.[69]

Illinois’ new legislation went into effect in January 2024 and will have the potential to shine a brighter light on mergers and acquisitions among healthcare entities in the state. Overall, it is a step toward more effectively regulating healthcare mergers and acquisitions. However, the AG will not have the power to halt a transaction –only to request more information and postpone a transaction if the relevant entities are noncompliant with the law. And it’s a forward-looking piece of legislation, and so it will not force Cedar Health Group to reopen Westlake hospital.

California

In February 2024, California Attorney General Rob Bonta and Assembly Speaker pro Tempore Jim Wood (D-Healdsburg) introduced a new bill intended to strengthen state oversight of private equity abuses in healthcare.

In announcing the new bill, AB 3129, AG Bonta wrote:

“At the California Department of Justice, we believe that the healthcare system should serve patients. Yet, too often, private equity has served corporate profiteers by maximizing their profits at the expense of access, quality, and affordability of healthcare for Californians. Today’s legislation not only curtails harmful transactions but also stops practices that undermine the practice of medicine.”

California has had its share of problems with PE healthcare investments.

Prospect Medical Holdings owns seven acute care and behavioral health hospitals in southern California. Pipeline Health also owns hospitals in southern California.

And the problems extend beyond hospitals – private equity-owned healthcare companies across the state have come under fire in recent years for business practices that hurt patient care, ranging from PE-owned group homes for people with disabilities to the company that provides healthcare in many of California’s jails.

According to its backers, the original version of AB 3129 would create stronger oversight of PE and hedge fund acquisitions of healthcare companies through the Attorney General’s authority as well as strengthen the bar on the corporate practice of medicine. The proposed law would:

  • Require a private equity group or hedge fund to provide advance written notice prior to a change of control or acquisition of a healthcare facility at least 90 days before the change in control or acquisition.
  • Require a private equity group or hedge fund to provide advance written notice to the Attorney General prior to a change of control or acquisition between a private equity group or hedge fund and a nonphysician provider, or a provider with specified annual revenue.
  • Authorize the Attorney General to grant, deny, or impose conditions to a change of control or an acquisition between a private equity group or hedge fund and a health care facility, provider group, or both, if the change of control or acquisition may have a substantial likelihood of anticompetitive effects or may create a significant effect on the access or availability of health care services to the affected community.
  • Prohibit private equity group or hedge fund involved in any manner with a physician or psychiatric from controlling or directing that practice.
  • Prohibit physician or psychiatric practice from entering into an agreement or arrangement with an entity controlled in part or in whole directly or indirectly by a private equity group or hedge fund in which that private equity group or hedge fund manages any of the affairs of the physician or psychiatric practice in exchange for a fee.

The Private Equity Stakeholder Project submitted two testimonies in support of the original bill – one to the Senate Health Committee and the other to the Senate Judiciary Committee.

However, since the bill was introduced in February, it has undergone key changes. CalMatters reported that “Between April and June, a coalition representing hospitals, investors, some dentists and doctors spent $583,000 lobbying against the measure, according to state financial reporting records.” [70] Lobbyists succeeded in having for-profit hospitals and dermatology practices excluded from the bill, which will go up for a final vote in late August. [71]

Other states

An Indiana bill titled “Reporting of Health Care Entity Mergers and Acquisitions” was signed into law in March 2024 and went into effect this July. Law firm Holland & Knight reports that the law “appears to be one of the broadest state healthcare transaction review laws enacted to date.”[72] The new law requires various healthcare entities to provide 90 days’ notice to the state Attorney General for a broad array of healthcare transactions, including both asset and equity transactions, as well as direct and indirect changes in control.[73]

The threshold triggering review is not related to the size of the transaction, but rather the total assets of the transacting healthcare entities being $10 million or higher. According to Bloomberg Law’s analysis of the new law, it “doesn’t appear to require approval by the attorney general, it does give the attorney general 45-days after the required notice has been submitted to review the information. During that period, the attorney general may analyze antitrust concerns, and issue a civil investigative demand requesting additional information from the entity that has submitted notice.”[74]

In Minnesota, state lawmakers introduced a bill that would prohibit private equity companies and real estate investment trusts from acquiring or increasing control over providers of healthcare services. The bill defines healthcare providers as “any entity that provides health or medical care services for a fee,” covering a wide range of companies including nursing homes, dental clinics, and physician practices. It is currently tabled until the legislative session resumes in January 2025.[75]

Conclusion & Policy Recommendations

As multiple states reel from the impacts of private equity pillaging on their hospitals, legislators have made attempts to create more oversight over private equity in healthcare. Unfortunately, many of these efforts have stalled in state legislatures or have been watered down by industry lobbying. While these states must contend with struggling hospitals closing and cutting services, the private equity investors who owned these systems have already made their money and run. State legislatures will need to do much more to prevent future pillaging.

The Private Equity Stakeholder Project advocates for state legislatures to pass laws that:

  • Create a robust set of change-of-ownership regulations for healthcare facilities that give the state the authority to approve or deny transactions based on multiple factors, including cost and market share, long term access to quality healthcare for the community, and preservation of jobs and collective bargaining rights. Rhode Island’s Hospital Conversions Act is a good starting place.
  • Require full financial transparency of licensed hospital operators and their investors, including private equity firms, real estate investment trusts (REITs), and other shareholders. States should have statutory requirements for all hospitals and health systems to produce annual, audited financial disclosures to the state, including for their parent company(ies) and any subsidiaries.
  • These laws must be enforceable and have real consequences for noncompliance. Businesses should lose their licenses to operate hospitals and be permanently barred from acquiring or opening new facilities if they demonstrate a pattern of noncompliance.
  • Require that acute care hospital operators offer a minimum package of services, including emergency care and labor and delivery services, in order to maintain or be granted a license to operate.
  • Give the state the authority to put hospitals in receivership in the event of mismanagement by their owners, in order to protect access to healthcare for the communities the hospital serves. States should implement a tax on for-profit providers to fund state receivership.
  • Bar hospital investors from paying themselves debt-funded dividends from health systems (also called dividend recapitalizations) or dividends from real estate sales. If dividends are allowed, they should only be paid as a percentage of overall profit and may not be funded by taking on additional debt or lease liabilities. Investors should be able to prove that the dividends can be funded without impacting the short -and long-term financial viability of the hospital/health system.
  • Ban or place limits on sale-leasebacks and similar types of real estate transactions involving hospital real estate, for all types of hospitals.
    • If sale-leasebacks are permitted, the state should have the authority to approve or deny the transaction, and there should be limits or bans on their proceeds being used for investor payments; requirements for the health system and investors to prove that transaction will not negatively impact the short- and long-term sustainability of the system; a requirement for the state to commission an independent valuation of the property; and a requirement for a certain percentage of the proceeds to go toward capital improvements in the hospital(s).
  • Triple net leases for hospital real estate, which require the tenant to pay property taxes, property insurance and maintenance, should be outright banned.
  • Place limits on the amount of debt used to finance hospital buyouts.
  • Have joint liability and several liability for corporate owners and investors of hospital systems (both operations and real estate). This would mean that if the hospital was sued for violations of the False Claims Act, a right of action would automatically exist against the private equity owner(s), landlord, and other investors.
  • Place limits on management fees. Investor owners may not charge arbitrary fees to hospital companies, such as management fees for services not provided. Management fees should be completely illegal if they’re for services unrendered (or to be rendered in the future – i.e. charging a company management fees for the next five years). Investors should have to report management fees collected from hospital portfolio companies (and for what services rendered and when) to state regulators.

The aforementioned policy recommendations could go far in reigning in the most exploitative business practices of private equity firms, hospital landlords, and other investors in US hospitals. However, in the current for-profit healthcare system, private players—be they for-profit hospitals, insurers, hospital landlords, or medical staffing companies–will continue to dictate access to and quality of health care unless our society shifts to treat healthcare as a public good and a human right.

 

 

Resources

[1] Ashley, Madeline. “3rd Steward Massachusetts Hospital Faces Closure, More Sale Hearings Delayed.” Becker’s Hospital Review, August 12, 2024. https://www.beckershospitalreview.com/finance/3rd-steward-massachusetts-hospital-faces-closure-more-sale-hearings-delayed.html; Ashley, Madeline. “Steward to Lay off 944 in Ohio amid Hospital Closures.” Becker’s Hospital CFO Report, August 22, 2024. https://www.beckershospitalreview.com/finance/steward-ohio-hospital-closures-to-result-in-944-layoffs.html.

[2] Pgs. 27-28 of Bugbee, Mary. “The Pillaging of Steward Health Care – How a Private Equity Firm and Hospital Landlord Contributed to Steward’s Bankruptcy.” Private Equity Stakeholder Project. Accessed August 13, 2024. https://pestakeholder.org/wp-content/uploads/2024/07/PESP_report_Steward-Bankruptcy_2024.pdf.

[3] Wolfson, Bernard. “California Bill Would Require State Review of Private Equity Deals in Healthcare.” Los Angeles Times, August 9, 2024, sec. Business. https://www.latimes.com/business/story/2024-08-09/california-bill-would-require-state-review-of-private-equity-deals-in-healthcare; Hwang, Kristen. “Big California Health Care Businesses Win Exemptions from Proposed Hedge Fund Rules.” CalMatters, August 19, 2024, sec. Health. http://calmatters.org/health/2024/08/private-equity-health-care/.

[4] Lavin, Nancy. “Mass. Is Paying Dearly to Save Its Hospitals from Bankrupt Steward, a Fate R.I. AG Wants to Avoid.” Rhode Island Current (blog), August 19, 2024. https://rhodeislandcurrent.com/2024/08/19/mass-is-paying-dearly-to-save-its-hospitals-from-bankrupt-steward-a-fate-r-i-ag-wants-to-avoid/.

[5] Sabrina Willmer. “Cerberus Quadruples Money After Unusual Exit From Hospital Giant.” Bloomberg.Com, May 27, 2021. https://www.bloomberg.com/news/articles/2021-05-27/cerberus-quadruples-money-after-unusual-exit-from-hospital-giant.

[6] Weil, Jonathan. “The Private-Equity Deal That Flattened a Hospital Chain and Its Landlord.” WSJ, May 7, 2024, sec. Markets. https://www.wsj.com/finance/the-private-equity-deal-that-flattened-a-hospital-chain-and-its-landlord-3096747d.

[7] Vogel, Susanna. “Steward Health Care Files for Chapter 11 Bankruptcy.” Healthcare Dive, May 6, 2024. https://www.healthcaredive.com/news/steward-health-care-files-chapter-11-bankruptcy/714050/.

[8] Vogel, Susanna. “Steward’s Legal Battles Offer Insight into Pattern of Mismanagement.” Healthcare Dive, March 20, 2024. https://www.healthcaredive.com/news/steward-health-care-mismanagement-lawsuits/710102/.

[9] Helms, Chris. “‘Couldn’t Be Worse than It Is Right Now’: Doctor Gives inside Look at Good Sam in Brockton.” Enterprise News, May 13, 2024. https://www.enterprisenews.com/story/news/healthcare/2024/05/13/brockton-massachusetts-good-samaritan-hospital-steward-health-care-doctor/73634136007/; [9] Woodruff, Emily. “Lawmaker Calls for Hearing over Troubled Louisiana Hospital; ‘It’s an Abysmal Situation.’” NOLA.com, March 21, 2024. https://www.nola.com/news/healthcare_hospitals/lawmaker-calls-for-hearing-over-troubled-louisiana-hospital-its-an-abysmal-situation-west-monroe-and-steward/article_6a8a2118-e7a9-11ee-93f2-b7268cfb5fb0.html.

[10] Chan, Tiffany. “First Responders, Nurses Say Steward Crisis Hurts Patients with Understaffing, Longer Response Times.” CBS Boston, February 21, 2024. https://www.cbsnews.com/boston/news/steward-healthcare-stephen-lynch-norwood-hospital/.

[11] Bartlett, Jessica. “Steward’s Medical Devices Were Repossessed. Weeks Later, a New Mother Died.” The Boston Globe, January 25, 2024. https://www.bostonglobe.com/2024/01/25/business/steward-health-care-mother-death/.

[12] Ashley, Madeline. “Steward Florida Hospital Shutters Obstetrics Unit Early.” Becker’s Hospital Review, February 15, 2024. https://www.beckershospitalreview.com/finance/steward-florida-hospital-shutters-obstetrics-unit-early.html.

[13] Vogel, Susanna. “Troubled Steward Health Care Announces yet Another Facility Closure.” Healthcare Dive, January 26, 2024. https://www.healthcaredive.com/news/steward-health-care-closes-medical-center-southeast-texas/705712/; Bean, Mackenzie. “Steward Rehab Hospital Closes.” Becker’s Hospital Review, April 2, 2024. https://www.beckershospitalreview.com/finance/steward-rehab-hospital-to-close-april-2.html.

[14] Hechinger, John, and Sabrina Willmer. “Life and Debt at a Private Equity Hospital.” Bloomberg, August 6, 2020. https://www.bloomberg.com/news/features/2020-08-06/cerberus-backed-hospitals-face-life-and-debt-as-virus-rages.

[15] Vogel, Susanna. “Steward Further Extends Asset Sale Timeline. More Delays Could Follow.” Healthcare Dive, June 21, 2024. https://www.healthcaredive.com/news/steward-delays-asset-sale-timeline-again/719518/.

[16] Vogel, Susanna. “Judge Approves Steward’s Plan to Close 2 Hospitals by Month’s End.” Healthcare Dive, August 1, 2024. https://www.healthcaredive.com/news/steward-health-care-close-2-massachusetts-hospitals-judge-approval/723045/.

[17] Ashley, Madeline. “Steward Files Lawsuit against Landlord over Hospital Sales.” Becker’s Hospital Review, August 19, 2024. https://www.beckershospitalreview.com/legal-regulatory-issues/steward-landlord-has-crippled-hospital-sales-motion-claims.html.

[18] malegislature.gov. “House Passes Major Health Care Legislation,” May 16, 2024. https://malegislature.gov/PressRoom/Detail?pressReleaseId=84.

[19] malegislature.gov. “House Passes Major Health Care Legislation,” May 16, 2024. https://malegislature.gov/PressRoom/Detail?pressReleaseId=84.

[20] malegislature.gov. “Senate Passes Health Care Reform Boosting Safeguards Against For-Profit Entities,” July 18, 2024. https://malegislature.gov/PressRoom/Detail?pressReleaseId=116.

[21] Lisinski, Chris. “What MA State Senate Bill Does to Prevent Another Steward Collapse? A 60-Second Read.” Enterprise News. Accessed August 20, 2024. https://www.enterprisenews.com/story/news/state/2024/07/16/massachusetts-senate-health-care-bill-proposes-more-oversight-after-steward-health-care-bankruptcy/74424919007/.

[22] Wuthmann, Walter. “Inside the Unproductive and Contentious End of the Mass. State House’s Legislative Session,” August 5, 2024. https://www.wbur.org/news/2024/08/05/massachusetts-state-house-legislative-session-last-day-newsletter.

[23] Massachusetts Health & Hospital Association. “Healthcare Bills Hit a Pause,” August 5, 2024. https://www.mhalink.org/mondayreport/healthcare-bills-hit-a-pause/.

[24] Knauth. “Massachusetts Warns of Health ‘crisis’ amid Steward Hospital Sale Delay | Reuters.” Reuters, July 31, 2024. https://www.reuters.com/legal/litigation/massachusetts-warns-health-crisis-amid-steward-hospital-sale-delay-2024-07-31/.

[25] “Hospital Locations | Prospect Medical Holdings, Inc.” Accessed October 24, 2023. https://www.pmh.com/locations/hospital-locations/.

[26] O’Grady, Eileen. “UPDATE: Leonard Green-Led Ownership Collected $658 Million in Dividends and Fees from Prospect Medical Holdings despite Challenges, Commitment to Regulators to Forgo Dividends.” Private Equity Stakeholder Project, May 2020. https://pestakeholder.org/wp-content/uploads/2020/05/UPDATE-Leonard-Green-Prospect-Medical-Dividends-PESP-051420.pdf.

[27] Altimari, Jenna Carlesso, Dave. “CT to Issue Decision on Prospect Hospitals Deal as Talks Break Down.” CT Mirror, October 18, 2023. http://ctmirror.org/2023/10/17/ct-prospect-medical-holdings-yale-health-deal/.

[28] Altimari, Dave, and Jenna Carlesso. “Inside the Cyberattack at Prospect Medical Holdings’ CT Hospitals.” CT Mirror, October 1, 2023. http://ctmirror.org/2023/10/01/ct-prospect-medical-holdings-hospitals-cyberattack-yale-sale/.

[29] Vogel, Susanna. “Prospect Medical Holdings Reveals DOJ Investigation.” Healthcare Dive, July 2, 2024. https://www.healthcaredive.com/news/prospect-medical-holdings-doj-investigation/720424/.

[30] Altimari, Dave, Jenna Carlesso, and Mark Pazniokas. “Hospital Execs to Lamont, Lawmakers: Seal the Yale-Prospect Deal.” CT Mirror, September 27, 2023. http://ctmirror.org/2023/09/26/hospital-execs-to-lamont-lawmakers-seal-the-yale-prospect-deal/.

[31] Rahman, MD. “Opinion: Care at Manchester Memorial Hospital Must Be Protected.” CT Mirror, October 23, 2023. http://ctmirror.org/2023/10/23/manchester-hospital-prospect-medical-holdings/.

[32] Srinivasan, Sujata. “Powerful Landlord Could Play Key Role in Deal between Prospect Medical and Yale.” CAI, March 29, 2024. https://www.capeandislands.org/2024-03-29/prospect-medical-yale-mpt-ct; McDuffie, Lisa. “Medical Properties Trust to Sell Three Hospitals to Lessee for Approximately $457M.” Connect CRE (blog), October 18, 2022. https://www.connectcre.com/stories/medical-properties-trust-to-sell-three-hospitals-to-lessee-for-approximately-457/.

[33] Altimari, Dave, and Jenna Carlesso. “Lamont Meets with Prospect Medical, YNHH Leaders to Try for Deal.” CT Mirror, May 22, 2024. http://ctmirror.org/2024/05/22/ct-prospect-medical-holdings-ynhh-lamont/.

[34] Vogel, Susanna. “Unsealed Court Filings Offer Details of DOJ Investigation into Prospect Medical.” Healthcare Dive, August 14, 2024. https://www.healthcaredive.com/news/prospect-doj-and-cyberattack-details/724169/.

[35] Carlesso, Jenna, and Mark Pazniokas. “CT Lawmakers Criticize OHS for CT Health Care Reform Bill Failure.” CT Mirror, May 8, 2024. http://ctmirror.org/2024/05/08/ct-ohs-hospital-reform-deidre-gifford/.

[36] Kayser, Alexis. “Connecticut Bill Calls for More Oversight of Private Equity in Healthcare M&A.” Becker’s Hospital Review, March 22, 2024. https://www.beckershospitalreview.com/legal-regulatory-issues/connecticut-bill-calls-for-more-oversight-of-private-equity-in-healthcare-m-a.html.

[37] Connecticut General Assembly. “Connecticut General Assembly – HB 5319.” Accessed August 8, 2024. https://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=HB05319&which_year=2024.

[38] Cooper, Kenny. “Prospect Reaches Deal to Halt Litigation, Opening Window to Sell Crozer Health.” WHYY, October 19, 2023. https://whyy.org/articles/crozer-health-sale-prospect-delaware-county-foundation/; Cooper, Kenny. “ChristianaCare Backs out of Deal to Buy Crozer Health from Prospect Medical Holdings.” WHYY, August 18, 2022. https://whyy.org/articles/crozer-health-christianacare-sale-scrapped-prospect-medical-holdings/.

[39] Cooper. “Crozer Health Lays off 215 People as Part of ‘Operational Restructuring Plan.’” WHYY, March 16, 2023. https://whyy.org/articles/crozer-health-hospitals-layoffs-restructuring/.

[40] Pennsylvania Office of Attorney General. “AG Henry Agrees to Suspend Lawsuit Against Prospect Medical Holdings as Company Pursues Sale of CrozerHealth in Delaware County,” October 19, 2023. https://www.attorneygeneral.gov/taking-action/ag-henry-agrees-to-suspend-lawsuit-against-prospect-medical-holdings-as-company-pursues-sale-of-crozerhealth-in-delaware-county/.

[41] Condon, Alan. “Prospect Medical Plans to Sell Crozer Health.” Becker’s Hospital Review, August 8, 2024. https://www.beckershospitalreview.com/hospital-transactions-and-valuation/prospect-medical-plans-to-sell-crozer-health.html.

[42] “CHA Partners – Your Community Development Partner.” Accessed August 21, 2024. https://chapartners.com/.

[43] Cooper, Kenny, and Nicole Leonard. “Crozer’s Suitor CHA Partners Has a Complicated History.” WHYY (blog), August 12, 2024. https://whyy.org/articles/cha-partners-crozer-health-delaware-county-purchase-proposal-what-to-know-new-jersey/.

[44] Cooper, Kenny. “Crozer Health to Shutter Operating Room Services at Taylor Hospital by Sept. 1.” WHYY (blog), August 12, 2024. https://whyy.org/articles/crozer-health-taylor-hospital-operating-room-closure/.

[45] Brubaker, Harold. “Crozer Health Layoffs Went Far Deeper than Initially Reported.” Philadelphia Inquirer, February 8, 2022, sec. Healthcare, business, health. https://www.inquirer.com/business/health/crozer-hospitals-layoffs-prospect-ceo-20220208.html.

[46] Cooper, Kenny. “Delaware County Memorial Hospital Closing Maternity Unit, Leaving 2 in the County.” WHYY, January 7, 2022. https://whyy.org/articles/delaware-county-memorial-hospital-to-close-maternity-unit-just-two-will-remain-in-the-county/.

[47]CBS News. “‘They Don’t Care’: Families Confused, In Pain After Delaware County Hospice Unit Announces Sudden Closure.” February 8, 2022. https://www.cbsnews.com/philadelphia/news/delaware-county-taylor-hospital-hospice-closing/.

[48] Cooper, Kenny. “Crozer Health Threatening to Shutter Paramedic Services for Delco Municipalities.” WHYY, April 15, 2022. https://whyy.org/articles/crozer-health-paramedic-services-delco/.

[49] Holland & Knight. “Healthcare Private Equity Transactions Under Scrutiny: Midyear Review | Insights | Holland & Knight,” August 1, 2024. https://www.hklaw.com/en/insights/publications/2024/08/healthcare-private-equity-transactions-under-scrutiny-midyear-review.

[50] ilga.gov. “Illinois General Assembly – Bill Status for HB2222.” Accessed August 30, 2023. https://www.ilga.gov/legislation/BillStatus.asp?DocNum=2222&GAID=17&DocTypeID=HB&SessionID=112&GA=103.

[51] ilga.gov. “Illinois General Assembly – Full Text of Public Act 103-0526.” Accessed August 30, 2023. https://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=103-0526.

[52] gov.illinois.gov. “Gov. Pritzker Takes Bill Action,” August 11, 2023. https://gov.illinois.gov/news/press-release.26878.html.

[53] ilga.gov. “Illinois General Assembly – Full Text of Public Act 103-0526.” Accessed August 30, 2023. https://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=103-0526.

[54] From Full Text of Public Act 103-0526: “Whenever the Attorney General has reason to believe that a health care facility or provider organization has engaged in or is engaging in a covered transaction without complying with the provisions of this Section, the Attorney General may apply for and obtain, in an action in the Circuit Court of Sangamon or Cook County, a temporary restraining order or injunction, or both, prohibiting the health care facility or provider organization from continuing its noncompliance or doing any act in furtherance thereof. The court may make such further orders or judgments, at law or in equity, as may be necessary to remedy such noncompliance.”

[55] illinoisattorneygeneral.gov. “Attorney General Raoul Applauds General Assembly Passage of Legislation Increasing Oversight of Health Care Market Consolidations,” May 18, 2023. https://www.illinoisattorneygeneral.gov/news/story/attorney-general-raoul-applauds-general-assembly-passage-of-legislation-increasing-oversight-of-health-care-market-consolidations.

[56] “Transcript of Public Hearing.” Illinois Health Facilities and Services Review Board, March 11, 2019. https://hfsrb.illinois.gov/content/dam/soi/en/web/hfsrb/projects/projectdocuments/2019/exemptions/e-004-19/2019-03-22-e-004-19-westlake-public-hearing-transcript.pdf.

[57] Staff Reporter. “Owners of West Suburban Hit with Lawsuit.” Oak Park, March 7, 2019. https://www.oakpark.com/2019/03/07/owners-of-west-suburban-hit-with-lawsuit/.

[58] Schencker, Lisa. “A Conflicting Series of Rulings Leaves Westlake Patients and Staff Members More Bewildered than Ever.” Chicago Tribune, April 18, 2019. https://www.chicagotribune.com/business/ct-biz-westlake-hospital-closure-appeals-court-20190418-story.html.

[59] Pg. 2; Bugbee, Mary. “How Private Equity Raided Safety Net Hospitals: Volume 2- Pipeline Health,” July 18, 2023. https://pestakeholder.org/reports/how-private-equity-raided-safety-net-hospitals-pipeline-health/.

[60] Goldberg, Stephanie. “Westlake’s Owners Never Intended to Keep the Hospital Open.” Crain’s Chicago Business, June 15, 2021. https://www.chicagobusiness.com/health-care/westlakes-owners-never-intended-keep-hospital-open; Pgs. 3-4; “Transcript of Hearing Held on 11-19-20 during Westlake’s Chapter 7 Bankruptcy Proceedings.” United States Bankruptcy Court for Northern District of Texas, November 19, 2020. https://drive.google.com/file/d/1t4_LzOEDUC98O8G4IUCRrQfsTkZtNaxh/view?usp=share_link.

[61] “Declaration of Ira Bodenstein.” United States Bankruptcy Court Northern District of Illinois Eastern Division, October 28, 2020.

[62] Haefner, Morgan. “New Jersey Investor Files to Reopen Illinois Hospital Shuttered by Pipeline.” Becker’s Hospital Review, June 22, 2021. https://www.beckershospitalreview.com/finance/new-jersey-investor-files-to-reopen-illinois-hospital-shuttered-by-pipeline.html.

[63] Cedar Health Group website, accessed January 17, 2023. https://cedarhealthgroup.com/

[64] Schencker, Lisa. “Westlake Hospital Could Be Reopened by New Jersey Company, after Bill Signed to Ease Reopening Requirements – Chicago Tribune.” Chicago Tribune, August 6, 2021. https://www.chicagotribune.com/business/ct-biz-westlake-hospital-reopening-legislation-pritzker-20210406-wfoovvpajnbljh6zc7awn5rpeq-story.html.

[65] Pg. 26; “Application for Re-Establishment and Change of Ownership Exemption – Woodlake Specialty Hospital.” Illinois Health Facilities and Services Review Board, July 29, 2021. https://hfsrb.illinois.gov/content/dam/soi/en/web/hfsrb/projects/projectdocuments/2021/exemptions/e-011-21/2021-06-01-e-011-21-woodlake-specialty-hospital-rev.pdf.

[66] Romain, Michael. “State Approves Request to Reopen Melrose Park Hospital.” Oak Park, November 9, 2021. https://www.oakpark.com/2021/11/09/state-approves-request-to-reopen-melrose-park-hospital/.

[67] Trustee’s Report of Sale of Westlake Hospital Campus to Woodlake Pacific Holdings, LLC and Lakeland Holdings 2020, LLC Pursuant to Fed. R. Bankr. P. 6004(f)(1).” Unites States Bankruptcy Court Northern District of Illinois Eastern Division, October 5, 2021. https://drive.google.com/file/d/1NZTa6GNwY8uAdWUIiAZLx3TlwnlaWTeW/view?usp=share_link.

[68] Herguth, Robert. “Illinois House Speaker Chris Welch’s Wife ShawnTe Raines-Welch Returns out-of-State Contribution to Judicial Campaign.” Chicago Sun-Times, April 22, 2022. https://chicago.suntimes.com/2022/4/22/23036273/shawnte-raines-welch-chris-judge-westlake-hospital-melrose-park-woodlake-cedar-health.

[69] “Woodlake Specialty Hospital.” Accessed August 20, 2024. https://woodlakespecialty.com/.

[70] Hwang, Kristen. “Big California Health Care Businesses Win Exemptions from Proposed Hedge Fund Rules.” CalMatters, August 19, 2024, sec. Health. http://calmatters.org/health/2024/08/private-equity-health-care/.

[71] Hwang, Kristen. “Big California Health Care Businesses Win Exemptions from Proposed Hedge Fund Rules.” CalMatters, August 19, 2024, sec. Health. http://calmatters.org/health/2024/08/private-equity-health-care/.

[72] Holland & Knight. “Healthcare Private Equity Transactions Under Scrutiny: Midyear Review | Insights | Holland & Knight,” August 1, 2024. https://www.hklaw.com/en/insights/publications/2024/08/healthcare-private-equity-transactions-under-scrutiny-midyear-review.

[73] White, Jaya, and Randall Fearnow. “Indiana M&A Law Prompts Preparation From Health-Care Providers.” Bloomberg Law, May 20, 2024. https://news.bloomberglaw.com/us-law-week/indiana-m-a-law-prompts-preparation-from-health-care-providers.

[74] White, Jaya, and Randall Fearnow. “Indiana M&A Law Prompts Preparation From Health-Care Providers.” Bloomberg Law, May 20, 2024. https://news.bloomberglaw.com/us-law-week/indiana-m-a-law-prompts-preparation-from-health-care-providers.

[75] Holland & Knight. “Healthcare Private Equity Transactions Under Scrutiny: Midyear Review | Insights | Holland & Knight,” August 1, 2024. https://www.hklaw.com/en/insights/publications/2024/08/healthcare-private-equity-transactions-under-scrutiny-midyear-review.

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