PE pare-down
The clinical healthcare space is no place for private equity — at least, according to the Vermont Senate, which advanced H.583 on Wednesday morning. That bill would limit private equity involvement in healthcare to making only business, not medical, decisions.
However, the current legislation is a far cry from what it originally set out to do. The bill no longer prohibits private equity or hedge funds from doing business in the state’s healthcare system.
“It still leaves Vermont very vulnerable. Very vulnerable,” Rep. Alyssa Black, D-Essex Town, who sponsored the bill in the House, said of the encroachment of private equity on healthcare. “We have done nothing — nothing — to stop it.”
The Vermont Health Care Advocate’s Office originally proposed the bill as a safeguard after watching the fallout of Cerberus Capital Management, a private equity company, selling its investment in the Texas-based healthcare group Steward Health Care, which had more than 30 hospitals across the country. The investor made $800 million in profits; the hospital group CEO took home more than $250 million; and then the group failed to pay vendors and employees, racking up a debt so extreme that vendors withheld medical devices, which cost lives. Patient care suffered as a result of short staffing.
“All evidence suggests that the introduction of private equity into healthcare decreases quality, increases costs, and, frankly, leads to death and leads to bankruptcies,” Black said.
The bill faced serious pushback from hospitals and groups of physicians, as it worked its way through the House Committee on Health Care earlier this spring. Many worried it would limit access to much-needed capital and prevent them from shifting a heavy administrative burden to those better suited to manage it.
“The original bill was very broad and captured transactions that we are looking to encourage potentially,” said Devon Green, the vice president of the Vermont Association of Hospitals and Health Systems. She cited practices like sharing administrative services across hospitals or a healthcare facility using debt to affiliate with another. She worried about curbing these abilities especially as the state pushes broader hospital transformation work.
Lawmakers in the House eventually slimmed the bill down to a version with far fewer restrictions on private equity and hedge funds’ ability to operate healthcare organizations in Vermont.
Black sees the version that passed through the Senate on Wednesday as a first step: It establishes a prohibition against something known as the “corporate practice of medicine.” That means only licensed healthcare professionals can make medical decisions about treatment, scheduling and clinical staffing levels.
It’s a protection that many states already have, and if the bill is enacted into law, Vermont will join them.
The legislation also establishes reporting requirements for healthcare organizations to publicly share data about their ownership and investors. Nursing homes, groups that operate only in telehealth and federally qualified health centers are excluded from those requirements.
Sam Peisch, a policy analyst for the Health Care Advocate’s Office, was integral in the early phases of crafting and lobbying for the bill. He also sees the current language as a good first step toward further protections.
“We will get a much better view of the scope and scale of the involvement of private equity in Vermont’s healthcare space,” he said. “We will get that reporting back next spring, and we will see what happens there.”
Peisch thinks that information can provide a launching-off point for further limitations on private equity’s involvement in healthcare.
Black agrees. She wants to address debt financing, which she said essentially creates indentured servants out of healthcare organizations, gutting them and leaving them with no assets. The practice of lease-backs — selling property for a profit, and then leasing back the space — is another area she hopes to create protections against.
Still, she worries about what is ahead.
“If you think they’re not coming here, they are coming, and we have no protections,” Black said. “We haven’t experienced the negative effects of private equity — yet. We’re lucky.”
In the know
House Speaker Jill Krowinski told reporters Wednesday that she is planning for the chamber to adjourn next Friday, May 22. She said she plans to start conducting twice-daily floor sessions as soon as this Friday, May 15, to accelerate the chamber’s work.
That timeline is at least in part dependent on when, and in what form, the Senate approves its version of this year’s major school funding and governance bill, H.955. Asked about rumors that deliberations over that bill could push the session into next month, the speaker said: “June has never been on the table in the House.”
— Shaun Robinson
Lawmakers originally wanted to ban federal agents in Vermont from wearing masks or disguises while doing their jobs, with some specific exceptions. Then, lawmakers in the House made a sharp change in course this month after a panel of three federal judges ruled that a similar California law was unconstitutional.
Now, the bill, S.208, tasks Vermont with creating a policy on masking and identification for local and state police. “I believe it’s something we can accept,” said Gov. Phil Scott during his weekly press conference Wednesday, referring to the newest version of the bill.
The changed bill was originally up for second reading on the House floor May 7, but representatives have postponed action twice, leaving it next up for consideration Thursday. House Speaker Jill Krowinski, D-Burlington, said votes on the bill have been postponed because lawmakers are continuing to debate it.
“There’s an appetite to include the feds despite the constitutionality concerns,” Krowinski said.
— Charlotte Oliver
On the move
The Senate sent H.577, a prescription drug card bill, to the governor’s desk Wednesday.
State Treasurer Mike Pieciak has advocated for Vermont to join the coalition of states in ArrayRx, which pools resources to buy prescription drugs at a lower, bulk rate. Anyone in Vermont, regardless of insurance, is eligible to use the free card to purchase prescriptions.
“Vermonters are feeling the pain of rising health care costs — hurting both their health and their wallets,” Pieciak said in a press release. “Under our plan, we can make medications more affordable, deliver immediate relief to families, and move toward a health care system that works for people, not against them.”
After opposition from the state’s independent pharmacists, the bill now includes a requirement to monitor the program’s impact on those pharmacies.
— Olivia Gieger
On the trail
A House district that spans five towns in Bennington and Rutland counties is slated for a rematch this year. Mike Rice, a Democrat from Dorset, announced Wednesday that he’s running to get his old seat back against Rep. Sandy Pinsonault, a Republican from the same town.
Pinsonault unseated Rice in 2024. She confirmed Wednesday that she’s seeking reelection.
Meanwhile, Kelsey Pasteris, a nurse from Hinesburg, is running to represent her town in the House as a Democrat. If elected, she’d replace Democratic Rep. Phil Pouech, who plans to step down after four years in the chamber.
Pasteris is Pouech’s “favored successor,” The Citizen reported earlier this year.
— Shaun Robinson
