Senate bill would jail private equity execs whose financial moves result in a patient’s death

Jailing private equity execs: ©Alex Kich - stock.adobe.com

Sen. Elizabeth Warren unveiled new legislation aimed at curbing "corporate greed" in the health care sector. The "Corporate Crimes Against Health Care" bill, introduced Tuesday morning, proposes stringent penalties and guardrails for health care executives who jeopardize patient safety and access to care.

Warren unveiled the legislation outside of Steward Health Care's St. Elizabeth's Medical Center. She said its recent bankruptcy is a prime example of the detrimental effects of corporate mismanagement. Steward sold the land beneath its Massachusetts hospitals in 2016. This move has since burdened the health care system with significant debt, struggling to keep up with payments to its landlord and vendors.

The proposed legislation would introduce a new criminal penalty, allowing for up to six years of imprisonment for executives whose actions in "looting health care entities like nursing homes and hospitals" result in patient deaths. Additionally, it empowers state attorneys general to recover all compensation paid to private equity executives within a decade surrounding the financial distress caused by their mismanagement.

"The health care landscape has been dramatically altered by the influx of private equity," Warren said. "Both the number of deals and investments in health care by private equity firms have increased tenfold from 2001 to 2020, peaking in 2021. Unfortunately, lax corporate transparency and accountability regulations have allowed these corporate owners to enrich themselves at the expense of patient care and community well-being."

Warren's bill addresses several issues:

• Clawback Provisions: Allows state and federal authorities to reclaim funds from private equity firms and executives whose financial strategies lead to severe, avoidable financial difficulties for health care providers.
• Criminal Penalties: Introduces up to six years of imprisonment for executives if their actions result in a patient's death.
• Proactive Measures: Prohibits federal health programs from making payments to health care organizations that sell assets to a real estate investment trust.
• Increased Transparency: Requires health care entities receiving federal funding to report ownership changes and detailed financial data, including debt levels.
• Moral Injury: Addresses the conflict health care professionals face between corporate demands and patient care.

Warren emphasized that this legislation is vital to protect patients, health care professionals, and communities from the adverse effects of financial engineering by private equity. "This bill will curb the use of strategies that threaten the integrity of our health care system and ensure that the public's right to quality, accessible healthcare is upheld," she stated.

The bill also mandates a report by the Health and Human Services Office of the Inspector General to Congress on the impacts of health care corporatization, highlighting the pressing need for this legislative action.

Private equity's footprint in health care has expanded to nearly every segment, including doctors' practices, hospice agencies, hospitals, health IT, and medical debt collection. The drive for profits often conflicts with the public’s need for an equitable and inclusive health care system, placing vulnerable populations at greater risk.

By targeting the financial practices that destabilize health care institutions, Warren's bill aims to ensure that the health care system prioritizes patient care over corporate profits, safeguarding the essential services that communities rely on.