In the near future, I will introduce legislation that will help reduce the risk of exploitation by for-profit healthcare providers by prohibiting both the Pennsylvania Public School Employees' Retirement System (PSERS) and the Pennsylvania State Employees' Retirement System (SERS) from investing in any private equity fund, including private real estate, whose holdings include hospitals or nursing homes. Public pension funds rely on taxpayer support and therefore should not make investments in entities that harm their annuitants and/or the general public.  

Investments in private equity-run health care systems carry significant risk and prioritize profits over patient well-being. We need to protect our healthcare system and we also need to protect the hard-earned retirement benefits of the PSERS and SERS annuitants. 

According to statistics compiled by the Private Equity Stakeholder Project, there are approximately 488 United States hospitals that are owned by private equity firms. That represents 8.5% of all private hospitals and 22.6% of all proprietary for-profit hospitals.  Private equity acquisitions can result in job losses due to staffing cuts to reduce costs, wage and/or benefit reductions for staff, and a decrease in patient safety and quality of care.  Private equity-owned hospitals have higher rates of patient falls, infections, and other preventable adverse events.  Private equity firms often acquire hospitals and nursing homes with substantial debt, resulting in higher operating costs that are passed on to patients and reductions in staffing, staff wages, and often lead to financial instability and force these care facilities into bankruptcy.  Bankruptcies can result in staff layoffs and disruption of critical healthcare services, which then leads to an increased burden on other healthcare services who must fill the gaps left by closures.  A 2023 working paper from the National Bureau of Economic Research reviewed patient-level Medicare data and found that compared to nursing homes overall, patient mortality rates are higher at facilities owned by private firms. Private equity firms are motivated by profit and return, which creates a harmful environment that allows for decisions that prioritize financial gains over the health and well-being of patients, staff, and the community.

Private Equity Stakeholder Project’s April 2024 report revealed that in the first half of 2024, nine private equity-owned healthcare companies filed for bankruptcy with others defaulted on their debt and narrowly avoided bankruptcy court through distressed debt exchanges.  Patient care should not be a vehicle for private equity profits, and public funds should be protected from such investments.

Right here in our Commonwealth, Pennsylvanians have experienced the harm and damage caused by private equity-owned healthcare facilities. After filing for bankruptcy earlier this year, Prospect Medical Holdings closed the doors at Crozer-Chester Medical Center and Taylor Hospital in Delaware County at the beginning of May 2025. The closures put hundreds of staff members out of work, left residents in a health care desert in a populated area including vulnerable communities, and increased wait times for EMS services when EMS providers are already struggling for funding due to insurance companies refusing to reimburse for the full cost of care.  These recent closures reflect the typical path of private equity ownership in our healthcare system nationwide. A January 2025 report issued by the US Senate Budget Committee detailed the harmful effects of private equity on the United States healthcare system. The report indicated that during the 2010s, private equity investors spent more than $1 trillion on all manner of health care acquisitions. By 2021, private equity investments in healthcare reached an all-time high of 515 deals valued at $151 billion. Specific to the closures in Delaware County, between 2010 and 2021, Prospect Medical Holdings was owned by Los Angeles-based private equity firm Leonard Green & Partners. According to the Private Equity Stakeholder Project, over the course of its ten-year ownership, Leonard Green and Prospect’s minority owners took approximately $658 million in fees and dividends from the safety net hospital chain in part by saddling it with debt and using the proceeds of the loans to pay themselves. They collected this money out of Prospect even as many of its hospitals suffered deteriorating financial conditions and quality concerns – between 2015 and 2020, Leonard Green continued to profit while the hospital company took a $603 million cumulative comprehensive loss.

The profit-focused approach of private equity firms fundamentally clashes with the principles of patient-centered healthcare. It is unacceptable to risk public funds and employee retirement security on investments that could compromise patient care for financial gain.

Please join me in cosponsoring this important legislation.