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March 13, 2025

Committee set to approve bill prohibiting private equity ownership of CT hospitals, nursing homes

HBJ PHOTO | DAVID KRECHEVSKY The State Capitol in Hartford.
By David Krechevsky

The state legislature’s Human Services Committee on Thursday will consider approving a bill that would prohibit future private equity of ownership of hospitals or nursing homes in order to receive Medicaid reimbursement. 

Senate Bill 1480 was submitted by Senate Pro-Tem Martin Looney (D-New Haven) and is on the agenda for approval by the committee during its meeting on Thursday.

In testimony submitted to the committee for a public hearing held Tuesday, Looney said the bill would “require hospitals and nursing homes in the state to be free of new private equity or real estate investment trust (REIT) ownership interests” recorded on and after Oct. 1, 2025, to receive Medicaid reimbursement. 

“The influx of private equity funding in all aspects of healthcare is quite concerning and the use of REITs demonstrates the sheer greed of these investors,” Looney said. “I look forward to working with this committee and the Public Health Committee to protect Connecticut residents from these entities.”

Looney raised the bill specifically after California-based Prospect Medical Holdings, a private equity firm that owns three hospitals in Connecticut, filed for Chapter 11 bankruptcy protection in January. 

Prospect — which owns Manchester Memorial, Rockville General and Waterbury hospitals — sold the land on which the hospitals are situated to a REIT and then leased them back, creating additional financial stress on the hospitals.

Department of Social Services Commissioner Andrea Barton Reeves also submitted testimony on the bill, saying it is not clear whether the state can prohibit private equity ownership as a condition for receiving Medicaid payments.

“Section 1902(a)(23) of the Social Security Act provides that any qualified provider has the opportunity to enroll in and provide services under Medicaid,” Barton Reeves said, “and it is not clear if the category of ownership would constitute a permissible category of provider qualification.”

She adds that DSS supports “stronger language to improve oversight into private equity and to explore other means to help nursing homes and hospitals fund essential capital projects and infrastructure investments.”

Dr. Deidre S. Gifford, commissioner of the state Office of Health Strategy (OHS), which oversees the states’ certificate of need (CON) application process that regulates the sale and transfer of healthcare facilities, also submitted testimony but suggested working with Gov. Ned Lamont on a similar bill. 

Lamont’s House Bill 6873 “would cast a wide net to ensure the full spectrum of healthcare transactions, such as those described in this bill, receive a foundational level of review by the state,” Gifford said. 

She added that Lamont’s bill “gives the state regulatory oversight without an outright prohibition on any particular type of investment strategy or vehicle.”

The Connecticut Hospital Association (CHA) submitted testimony opposing the bill. 

“We acknowledge the damage that unregulated private equity investment has caused in certain situations in Connecticut when it controls a healthcare facility,” the CHA states. “We are concerned, however,
that the blunt prohibition on private equity investment articulated in the bill could have unintended consequences: prohibiting modest yet important investments that support healthcare delivery in Connecticut.”

CHA noted that, “At their core, hospitals are seeking investments that support their mission, and we are concerned that a blanket prohibition on certain investments could diminish that ability.”

The bill is one of 31 to be considered for approval Thursday by the Human Services Committee during its meeting at 11 a.m. in Room 2A of the Legislative Office Building in Hartford.
 

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