|Posted:||June 8, 2022 12:53 PM|
|From:||Senator Timothy P. Kearney and Sen. John I. Kane, Sen. Amanda M. Cappelletti, Sen. Anthony H. Williams|
|To:||All Senate members|
|Subject:||For-Profit Healthcare Reform: Requiring Attorney General Approval of Change in Ownership of Health Systems|
|In the past few years, Pennsylvanians have witnessed too many hospital sales, bankruptcies, and closures. With thousands of patients abandoned, jobs lost, and communities left to pick up the pieces, there is a growing need for the state to take action to prevent ill-advised and predatory hospital deals. We will soon introduce legislation to give the Attorney General greater oversight over sales of hospitals and health systems.
Currently, the Attorney General is responsible for reviewing and approving major transactions involving nonprofit healthcare institutions, which fall under the OAG Charitable Trusts and Organizations Section’s jurisdiction. The Attorney General ensures that these institutions fulfill their charitable purposes and maintain good standing as a tax-exempt entity.
Even though for-profit hospitals are equally important anchors and public service providers within our communities, the Attorney General has no authority to review and approve major transactions that change the fate of for-profit hospitals and the thousands of workers and patients who depend on them. Outside of this oversight, out-of-state corporate owners can financialize their assets, splitting them into separate entities and trading them to other companies like stocks in an exchange. The opaque line of ownership that results allows management companies to cut patient care, jobs, and services without accountability and allows true owners to squeeze these hospitals into bankruptcy without liability.
Unlike stocks, a hospital’s assets – from emergency rooms to employees, from its real estate to its ambulance units – are not intangible. They are parts of a whole and their sustainability is critical to maintaining health services for our communities. Regardless of their ownership structure, they are major institutions of public purpose.
In other states, the Attorney General has the authority to reject, approve, or approve with conditions major transactions and changes in control of hospitals and health systems – authority that has been used to protect patients, jobs, and to ensure that hospital owners do not run successful hospitals into bankruptcy.
This legislation will require for-profit hospitals and health systems to give notice to the Attorney General before entering an agreement or undertaking a transaction involving an asset sale or disposition, or change in control in management or governance. The Attorney General will have 90 days to reject, approve, or approve with conditions the transactions after review and public hearing.
This legislation is one in a package of bills being introduced to combat negative impacts on Pennsylvania communities caused by trends in for-profit health system management. Please join us in protecting the health of our communities and preventing the abuse of Pennsylvania’s healthcare system.