The legislature’s Public Health Committee has advanced a bill that would restrict certain private equity practices in Connecticut hospitals, including banning sale-leaseback agreements.
Senate Bill 196, approved 30-2, would prohibit hospitals from selling their land to investors and leasing it back — a financing mechanism critics say can generate short-term cash for owners while saddling hospitals with long-term costs. The measure would also require hospitals to file annual reports with the state Department of Public Health confirming that while a private equity firm may control a hospital’s finances, it does not influence clinical decisions or interfere with providers’ professional judgment.
State Sen. Saud Anwar (D-South Windsor), the committee’s co-chair, said private equity’s past role in Connecticut hospitals “worsened patient outcomes and weakened the resources offered to entire communities,” citing the experience of hospitals previously owned by Prospect Medical Holdings.
Prospect formerly owned Manchester Memorial Hospital, Rockville General Hospital and Waterbury Hospital. Its tenure drew scrutiny from regulators over quality-of-care concerns and financial practices, including a sale-leaseback of hospital properties that generated proceeds for the company before it later entered bankruptcy.
Lawmakers also pointed to national research, including studies from the Harvard T.H. Chan School of Public Health, that found higher rates of complications and infections at hospitals owned by private equity firms.
The proposal still needs approval from the full House, Senate and Gov. Ned Lamont.
