Dive Brief:
- Earlier this week, Oregon Gov. Tina Kotek signed a law prohibiting non-physician investors from owning medical practices. Advocates say the law is the strongest state-level regulation yet aimed at curtailing private equity in healthcare.
- Existing law requires physicians in Oregon to own at least a 51% stake in most medical practices. However, lawmakers said corporations were able to gain ownership by employing physicians and listing them as clinic owners. The new law seeks to close that loophole.
- The law will not go into effect immediately. It contains a three-year adjustment period for clinics. Hospitals, tribal health facilities and behavioral health programs are exempt from the requirements.
Dive Insight:
Oregon’s push to regulate private equity’s influence in healthcare comes as momentum is growing nationwide to enhance oversight into healthcare deals.
The recent collapse of Steward Health Care and Prospect Medical Holdings, both of which were formerly owned by private equity, has only added fuel to that fire. Massachusetts, New Mexico, Indiana and Washington all passed laws this year bolstering state oversight of healthcare deals. Meanwhile, lawmakers in Pennsylvania are weighing a similar proposal.
In Oregon, lawmakers were compelled to enact the law in part by witnessing the effects of private equity and corporate ownership in healthcare, according to Rep. Lisa Fragala, D-Eugene, Creswell.
In a statement, Fragala referenced Eugene-based Oregon Medical Group, which was acquired by UnitedHealth-owned Optum in 2020. Some doctors fled the practice after the acquisition, alleging Optum instated a culture that prioritized money and quotas. Facing a shortage of doctors, Oregon Medical Group told some patients to seek care elsewhere, according to a report from Oregon Live.
“When we see consolidation in the healthcare market, we see three things happen: higher prices, negative effects on the quality of care, and decreased access to care,” said Fragala in a statement. “Today the Oregon Legislature took steps to address this crisis.”
The bill was supported by state nurse associations. However, the Oregon Ambulatory Surgery Center Association expressed concerns about the proposal, noting private investment was key to their strategy.
“In some communities, there is no hospital to swoop in to the rescue, or no hospital in a financial position to save a clinic” experiencing financial distress, the association wrote.
In a post on X, Sen. Elizabeth Warren, D-Mass., defended the law, calling it the “strongest” protection against corporate profiteering on the books. Warren has previously advocated for stronger policies against private equity, including criminal penalties for corporate executives if financial mismanagement leads to a patient’s death.
“Congress should follow and get private equity out of health care nationwide,” Warren said.
Law firms have also dubbed Oregon’s law the “toughest state barrier” to private equity in healthcare and the country’s “most aggressive” limit on private equity involvement in medical practice management.
Source link
