Two pieces of legislation aimed to provide additional oversight to private equity involvement in healthcare have made it to Gov. JB Pritzker’s desk.
The new acts include HB5000, which strengthens oversight and transparency requirements around healthcare transactions and ownership changes, and HB4728, legislation establishing new guardrails around private equity ownership of intellectual and developmental disability service providers, according to the Private Equity Stakeholder Project. The legislation comes in the wake of West Suburban Medical Center’s closure in March, with the Oak Park safety-net hospital previously brought to the brink bankruptcy by former owner Pipeline Health, a private equity-backed operator.
HB5000 would require health care facilities and health care provider organizations, which are parties to a transaction involving a merger or acquisition to provide notice of the transaction to the Office of the Attorney General. This includes parties to the transaction that are not a health care facility or provider organization but own or control, directly or indirectly, one or more of the two or more health care facilities or provider organizations that will be under common ownership, according to legislative Democrats.
The bill was authored by Sen. Graciela Guzmán of Chicago.
“Health care is not a luxury to be profited off of, but a human right,” said Guzmán. “We have seen private equity take over portions of our economy and sell off whole industries for parts. We need to understand how much of Illinois’ health care system is controlled by private equity and how it affects both care and access to it.”
Current West Sub operator Resilience Health, which acquired the embattled hospital and it’s Chicago sister hospital Weiss Memorial in late 2022, announced the closure of the century-old Oak Park hospital back in March citing a prolonged failure in the hospital’s electronic medical record billing system that resulted in as much as 90% of its work going unbilled. Weiss Memorial closed last August, as the hospital lost its CMS accreditation.
In the months leading up to the closure, Wednesday Journal reported on a variety of financial issues at West Sub and at Resilience Healthcare, including unpaid vendors, the loss of the hospital’s once revered doctor residency program and the millions owed in state and local taxes. Financial issues at West Sub had intensified under Pipeline’s ownership, with watch dogs like the Private Equity Stakeholder Project blaming the entity’s profit-minded decision making for putting patients at risk.
“Illinois lawmakers are responding to problems communities across the state have already experienced firsthand,” said Chris Noble, policy director at the private equity monitor. “From the collapse of Pipeline Health hospitals in the Chicago area to growing concerns around private equity-backed disability service providers, Illinois is recognizing the risks that can emerge when aggressive financial strategies enter essential care systems.”
“With these new laws, Illinois is becoming a leading example for states seeking to protect vulnerable residents and patients from the risks that can accompany private equity ownership in healthcare and disability services.”