Legislators in Rhode Island are taking decisive action against the role of private equity firms in the healthcare sector, aiming to prevent the financial crises that have recently impacted local hospitals. On February 10, 2024, both the Rhode Island House and Senate approved an $18 million state loan guarantee to assist in the acquisition of two vital safety net hospitals: Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence. These hospitals are currently owned by an out-of-state private equity firm that has declared bankruptcy.
The proposed loan guarantee serves as a backstop to facilitate a nonprofit’s purchase of the hospitals. This intervention is crucial, according to Senator Linda L. Ujifusa, who warned that the influence of private equity and corporate medicine poses a broader threat to healthcare facilities across the state. “We have important hospitals that are at risk of following the same path as Fatima and Roger Williams,” Ujifusa stated, highlighting the financial difficulties faced by numerous healthcare providers, including South County Hospital.
Legislative Measures to Enhance Oversight
In response to these concerns, Ujifusa and Representative Kathleen A. Fogarty have introduced two bills aimed at safeguarding Rhode Island’s healthcare system from what they describe as the detrimental effects of private equity ownership. Their legislation seeks to establish a “transparency and early warning” system that could help prevent private equity firms from acquiring hospitals in the future.
The bills would mandate that healthcare entities provide the Attorney General and the state Health Department with crucial financial and organizational information prior to any transactions. This would allow state officials to conduct necessary reviews and ensure that the deals do not significantly reduce competition, increase costs, or harm access, quality, or equity in healthcare.
State authorities would possess the discretion to approve transactions, approve them with conditions, or reject them outright. Ujifusa noted that the proposed legislation builds upon existing powers granted to the Attorney General and the Health Department under the Hospital Conversions Act and relevant consumer protection laws.
Addressing Broader Issues in Healthcare
The urgency of the proposed legislation is underscored by recent developments in neighboring Massachusetts, where Governor Maura Healey enacted a law designed to monitor and regulate private equity’s involvement in hospitals. Critics of private equity cite its role in the financial collapse of Steward Health Care, which led to the closure of hospitals in Dorchester and Ayer, resulting in tragic patient outcomes.
Ujifusa emphasized that the challenges facing the Rhode Island hospitals are indicative of a national issue. “Private equity has harmed hospitals across the country,” she stated. Moreover, she expressed her belief that healthcare should never be viewed solely as a business. “Lives are at stake, and we should never put private profits above public health.”
The proposed legislation is informed by model policies developed by the National Academy for State Health Policy and research conducted by the Center for Advancing Health Policy through Research at the Brown University School of Public Health. Ujifusa articulated the potential ramifications of hospital closures, citing the impact of the Memorial Hospital closure in Pawtucket, which led to an increased patient load at nearby emergency rooms.
In addition to the proposed oversight measures, Ujifusa and Fogarty have introduced the Rhode Island Ban on the Corporate Practice of Medicine Act. This bill aims to prevent entities without healthcare provider licenses from owning medical practices or employing licensed healthcare professionals, thereby curtailing the influence of non-clinical entities on medical decision-making.
Legislators argue that such corporate structures compromise clinical independence and obscure accountability for patient outcomes. They contend that profit-driven motives can divert critical resources away from patient care and jeopardize the quality of services provided.
Ujifusa concluded that legislative action is imperative, especially given the absence of federal regulations governing private equity’s role in healthcare. As Rhode Island takes steps to fortify its healthcare system, the proposed bills may represent a significant shift towards prioritizing patient welfare over corporate profit.
For more updates on this issue, contact Edward Fitzpatrick at [email protected]. Follow him on social media @FitzProv.
