Legislators focus on private equity’s role in healthcare as Steward faces challenges

Private Equity and Industry Consolidation: The Challenges Facing Healthcare in Massachusetts

Private equity involvement in the healthcare industry in Massachusetts has been increasing for a long time, putting financial troubles on companies like Steward Health Care. According to officials, this trend is not limited to just one for-profit system.

Lawmakers are now investigating the factors that led to the crisis at Steward Health Care, which is the third-largest hospital system in the state. The Health Policy Commission Executive Director David Seltz presented data that shows a significant rise in private equity involvement in healthcare transactions in Massachusetts over the years.

Between 2013 and 2023, the agency examined 182 provider purchases and sales. The data revealed that the share of transactions involving private equity interests more than doubled during this period. Seltz pointed out that between 2013 and 2016, private equity was involved in about 25 percent of transactions. This figure increased to 47 percent between 2017 and 2020 and to 63 percent between 2020 and 2023.

Leaders at the HPC have been discussing this trend since December, but the issues at Steward have brought them into sharper focus. Seltz highlighted the need for urgent action to address the challenges posed by private equity, for-profit ownership, and industry consolidation in the healthcare sector.

The Health Care Financing Committee has been tasked with investigating gaps in the state’s regulatory framework and proposing policy changes to prevent similar problems at other facilities. Seltz also mentioned that they were not informed about Steward’s acquisition by Medical Properties Trust, which led to significant financial difficulties for their company. The situation is still developing.

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