Press Release  HPC EXECUTIVE DIRECTOR TESTIFIES BEFORE SPECIAL HEARING ON PRIVATE EQUITY

BOSTON — Massachusetts Health Policy Commission (HPC) Executive Director David Seltz testified today at a special hearing of the Legislature’s Joint Committee on Health Care Financing, Examination of the Effects of Private Equity Ownership and Investment in Health Care. Director Seltz testified alongside Mary Beckman, Senior Advisor, Massachusetts Executive Office of Health and Human Services, and Torey McNamara, Senior Policy Advisor, Massachusetts Department of Public Health, on the first panel of the day, focused on state oversight of the Massachusetts health care market.

Seltz presented novel findings on the increasing role of private equity investment in the Massachusetts health care system. In an HPC analysis of health care provider mergers and acquisitions from 2013-2023, 47% (85 of 182) of health care provider transactions involved private equity firms. Seltz cautioned that private equity investment utilizes unique financial strategies to generate profit that can be destabilizing to the health care market, while being associated with worse outcomes and higher costs.

Seltz underscored that Massachusetts needs enhanced and modernized state oversight of these types of transactions, and outlined potential policy levers that the Legislature could employ to increase transparency and oversight of private equity. “To ensure that all organizations in our health care system are operating in good faith, by a commonly accepted set of rules, the need for urgent action could not be greater,” HPC Executive Director David Seltz said.

A link to Director Seltz’s full presentation can be found on the HPC’s website.

HPC Policy Recommendations to Increase Oversight and Transparency of Private Equity Investment in Health Care:

Enhance health care market transparency and oversight through the HPC’s current authorities.

Enhance public transparency and oversight by amending the HPC’s Material Change Notice process to capture a broader range of transactions, reflecting emerging market trends, including:

• Substantial changes in capacity;
• Significant investment by private equity or for-profit in an existing health care provider; 
• Substantial sale of assets for an ownership share or for the purposes of a lease-back arrangement.

Amend the HPC’s Registration of Provider Organization (RPO) program to:

• Include public payer revenue in the reporting threshold. This change will expand the type of entities that must file with the RPO program to include sectors frequently targeted by PE firms and provide more public insight into the structure and financial health of provider organizations. 
• Establish enforceable penalties for non-compliance to ensure all required information is provided in timely manner.

Align state regulatory tools and enhance monitoring of health care resources.

Recent health care market activity, implicating both access and cost, have highlighted the opportunity to better align the range of state agency oversight processes and the need for a better understanding of the allocation of health care resources across the Commonwealth. The HPC recommends the Commonwealth should conduct data-driven assessments of service supply and distribution based on identified needs.

Consider additional state authority to approve or deny transactions, or impose conditions, to mitigate potential harms.

Similar to other states such as Oregon, further empower state oversight authorities (e.g., HPC, DPH, AGO) to ensure all proposed transactions are consistent with state goals on cost, quality, access, and equity (not limited to PE transactions). Potential conditions of approval could include: 

• Efforts to maintain or enhance access to needed services,
• Quality standards and improvements,
• Ongoing financial and compliance monitoring including on staffing, and,
• Conditions on exit or sale.

A recording of the hearing can be found on the Joint Committee’s website. The HPC’s presentation materials from the hearing and corresponding policy recommendations are available on the HPC’s website.

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