As Democrats leave office at the federal level, they are returning to the subject of the role of private capital in health care:
- As President Biden delivered a farewell speech focused on the dangers of an “oligarchy” in America, his Department of Health and Human Services (HHS), in one of its final actions, released a report on the perceived dangers and negative consequences of consolidation and private equity (PE) in health care.
- In New York, Governor Kathy Hochul, in her State of the State address, proposed to revisit and expand the law passed two years ago in the 2023-24 Budget that required disclosure of “material transactions” involving health care entities and private investors.
Some elements of the Republican Party have expressed skepticism, including Vice President-elect J.D. Vance, who notably supported Federal Trade Commission (FTC) chair Lina Khan’s approach to antitrust. Several bills that would enact reporting requirements for entities acquiring health care providers went through committee with bipartisan support in the previous Congress, although none were eventually enacted.
However, the Trump Administration is more widely viewed as likely to be favorable to a greater role for private capital in health care and a deregulatory approach in general. Trump’s intended replacement for Khan at the FTC, current commissioner Andrew Ferguson, has promised to “reverse Lina Khan’s anti-business agenda” and stop her “war on mergers.”
Nevertheless, this topic continues to be salient; it is entirely possible there will be an increase in state-level oversight even while federal regulations loosen. SPG will continue to monitor developments in these areas.
Below are brief summaries of the HHS report and of Governor Hochul’s State of the State pledge. Should you have any questions or would like additional information, please do not hesitate to reach out. We will continue to send updates as developments evolve.
HHS Report on Consolidation and Private Equity in Health Care Markets
On January 15th, HHS released a report addressing consolidation and private equity (PE) investments in health care markets in response to a tri-agency Request for Information (RFI). The report highlights concerns about how consolidation can influence costs, competition, and access to care, and underscores the need for enhanced oversight. The report summarizes the over 2,000 public comments submitted in response to the RFI.
Key themes from the comments include:
- Provider consolidation leads to higher prices and less access for patients
- M&A in health care services, especially in PE-backed transactions, results in process changes and quality reductions
- Physicians that worked with PE firms offer mixed reviews
- There is widespread desire for transparency on PE-led transactions
- People are dissatisfied with private health insurers, especially vertically integrated insurers
Policy considerations include:
- Enhancing ownership transparency, building on CMS’ nursing home ownership transparency rule
- Increasing disclosures of mergers & acquisitions in health care by lowering reporting thresholds, requiring review and approval, and empowering relevant authorities with data and resources needed to conduct review of health care transactions
- Pursuing further enforcement actions to halt hospital mergers and industry rollups
- Continuing to improve data sharing and other collaboration across agencies, Congress, and state and local authorities in an all-government approach to promoting competition
You can read the full report here.
NYS 2020 State of the State Proposal – Investor-backed Health Care Transactions
On January 14th, Governor Kathy Hochul delivered her fourth State of the State speech, outlining her policy agenda for the 2025 Legislative Session. Amongst the number of notable health-related proposals outlined in the 2025 State of the State, the Governor outlined her plans for investor-backed health care transactions. Building on the FY 2024 reporting requirements for material transactions (see additional information here from SPG’s FY24 Enacted Budget Summary), Governor Hochul plans to introduce legislation that would strengthen New York State’s ability to collect data and analyze investor-backed health care transactions, such as mergers and acquisitions. These proposals aim to enhance transparency and provide the state with more tools to evaluate the impact of these transactions on cost, quality, access, and health equity.
SPG’s full summary of proposals relevant to health care providers and stakeholders in the State of the State is available here. The 2025 State of the State book is available here. Further details, including legislative language for proposals that require funding appropriations, will be included in the Governor’s upcoming Executive Budget and Financial Plan, which are expected to be released next week.