|Posted:||June 8, 2022 12:54 PM|
|From:||Senator Amanda M. Cappelletti and Sen. John I. Kane, Sen. Timothy P. Kearney, Sen. Anthony H. Williams|
|To:||All Senate members|
|Subject:||For-Profit Healthcare Reform: Moratorium on Dividends after Health System Acquisitions|
|Over the last two decades, private equity activity has exploded in all sectors of the economy – from nursing homes, to newspapers, to hospitals. The private equity industry claims it earns high returns by using their management expertise to make a company’s operations run more efficiently, then selling the company for profit. In reality, the equity funds load debt on the companies they acquire, strip them of their assets, and charge incredibly high fees to guarantee themselves large payouts regardless of the actual returns on investment. If the investments don’t perform well, the private equity firms often walk away from workers, communities, and investors, while taking home large paychecks for themselves.
Protecting the community, workers, investors, and consumers over private equity funds on Wall Street should be a priority. These funds should be held accountable when loopholes allow them to capture all the rewards of their investments while protecting themselves from risk through debt-funded dividends.
In the near future, we will be introducing legislation that would prohibit health systems from distributing dividends during the 24 months following a leveraged buyout by a for-profit company. This moratorium on dividends for 2 years would prevent private equity firms from making acquisitions, only to extract the resources from the acquired companies and subsequently walk away from the community altogether.
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 co-sponsoring this important legislation to end the looting of our health systems.
Introduced as SB1275