In recent years, private equity firms have focused on the healthcare industry through various types of acquisitions. That private equity involvement in the healthcare industry has led to decreasing competition among healthcare facilities and has led to concerns that medical professionals’ patient care decisions could be influenced by private equity’s profit-centered motives. Learn more about Pennsylvania’s proposed Health System Protection Act – in the form of the PA House Bill No. 1460 – and how it may impact you and your business.
Parties Impacted by House Bill No. 1460
To help combat private equity’s control over healthcare facilities, PA’s Health System Protection Act would entrust the Commonwealth’s Attorney General with the power to block transactions between private equity and health care facilities that could threaten Pennsylvanians’ access to healthcare. With the backing of the House, Senate, and Governor Josh Shapiro, this bill likely will become law.
House Bill No. 1460 addresses those transactions involving both a covered entity and a healthcare facility. The bill defines healthcare facilities to include hospitals, home healthcare agencies, hospices, long-term nursing care facilities, ambulatory cancer treatment centers, ambulatory surgical facilities, and birth centers. Covered entities include for-profit entities who own, operate, or control a healthcare entity; investors who purchase, develop, or dispose of certain assets; private equity companies; private equity funds; and real estate investment trusts or affiliates.
What You Should Know: The Nuts and Bolts of House Bill No. 1460 
House Bill No. 1460 will prohibit certain transactions between a healthcare facility and a covered entity if it is determined that the proposed transaction is against the public interest. Transactions against the public interest include transactions that cause:
- A significant decrease in competition or a significant increase in costs for Pennsylvania residents seeking medical care.
- An unfair method of competition or unfair/deceptive practice in or affecting the healthcare market.
- A significant decrease in the quality of healthcare within the healthcare entity’s market territory.
- A significant decrease in access to healthcare for Pennsylvanians seeking medical care.
- A significant decrease in access to healthcare in rural or low-income communities.
- A health care leaseback agreement (the sale or lease by the original operator of assets valued at $10,000,000 or higher coupled with the lease back of the same assets or real property to the original operator).
Under House Bill No. 1460, these types of transactions may only be permitted by the Attorney General if there is no feasible alternative course of action that could prevent a healthcare facility’s closure. The aim of limiting these types of transactions is to protect healthcare facilities from being influenced by business practices that may prioritize profit over quality.
Navigating PA’s Health System Protection Act
If House Bill No. 1460 becomes law, it will establish a new procedural hurdle in any transaction in Pennsylvania which involves a covered entity and healthcare facility.
Our healthcare attorneys in Allentown, PA remain current on laws impacting your practice and facilities. Please reach out to us with questions and concerns you may have regarding preparing for compliance with House Bill No. 1460.
FLB Summer Associate Camryn A. Griffon contributed to this blog.
