Press Statement  STATEMENT FROM HPC EXECUTIVE DIRECTOR DAVID SELTZ ON STEWARD BANKRUPTCY FILING

BOSTON — “With the news of Steward Health Care’s bankruptcy filing, the HPC is working to understand the implications of the Chapter 11 process on the current proposed sale of the physicians to OptumCare and any other related changes in ownership that may be filed in the future (e.g., Steward’s Massachusetts hospitals). We remain in close communication with the Healey-Driscoll Administration, the Attorney General's Office, the Executive Office of Health and Human Services, and the Massachusetts health care community about coordinated next steps.

“The HPC has begun examining the proposed sale of Stewardship Health, Inc. and Steward Health Care Network, Inc. to OptumCare, based on available information, however, the parties have still not submitted key required information and many details are still outstanding. The material change notice (MCN) filing is not complete until the HPC receives the definitive agreement governing the transaction and other requested information and documents which are necessary to conduct a preliminary review of potential impacts on health care costs and market functioning.

“This news underscores the need for immediate policy action to enhance oversight of the health care market.”

--HPC Executive Director David Seltz

Background on the Cost and Market Impact Review (CMIR) Process:

The HPC has 30 days from the date a material change notice is complete to determine whether to conduct a more comprehensive review, called a Cost and Market Impact Review (CMIR). If required, a CMIR is approximately a six-month process. The HPC does not have the authority to prohibit a transaction or to require conditions of approval, but the transaction cannot be completed until after the HPC’s review and any concurrent review by state or federal antitrust authorities.

More information on the HPC’s role in market oversight, including timelines for review and details on Material Change Notices (MCNs) and Cost and Market Impact Reviews (CMIRs), can be found in this overview on the HPC’s website.

HPC’s 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.

HPC Executive Director David Seltz discussed policy recommendations pertaining to private equity in health care at the Joint Committee on Health Care Financing’s Examination of the Effects of Private Equity Ownership and Investment in Health Care hearing on March 25, 2024.

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.

The HPC is grateful to the Massachusetts State Legislature for their thoughtful consideration of these policy recommendations during the final months of the legislative session, including the inclusion of many of these recommendations in recently proposed health care legislation.