The landscape of nursing home ownership is shifting as states increasingly scrutinize private equity involvement in healthcare. This trend emerges even as federal oversight appears to be waning, raising questions about the future of healthcare investment and its impact on resident care.
Pennsylvania is the latest state to join this movement. Governor Josh Shapiro recently urged the state legislature to enact a bill requiring pre-transaction notifications for all nursing home and hospital sales, mergers, acquisitions, and bankruptcy claims. He also called for increased scrutiny of these transactions by the state’s Attorney General. Shapiro directly linked recent healthcare facility closures to “predatory investors,” stating in his 2025-2026 budget proposal, “In the past year and a half, six hospitals and 11 nursing facilities have closed or filed for bankruptcy in the Commonwealth — and a majority of them were owned by private equity investors.”
This move by Pennsylvania reflects a broader trend. California, Indiana, Minnesota, New Mexico, and Oregon already have programs that regulate healthcare private equity, with Massachusetts, New Jersey, and New York considering similar legislation. According to a 2024 blog post by David Blumenthal, former president of The Commonwealth Fund, most states with such legislation are led by Democrats. This aligns with efforts at the federal level, where Democrat members of Congress have reintroduced the “Stop Wall Street Looting Act,” aiming to hold private equity firms accountable for the outcomes of their healthcare acquisitions. This renewed push for federal oversight follows the 2024 bankruptcy filing of hospital operator Steward Health Care, after its acquisition by private equity firm Cerberus. Senator Elizabeth Warren’s website highlighted substantial payouts received by Cerberus members, contrasting sharply with the alleged neglect of hospitals, staff, and patients under Steward’s operation. “The Stop Wall Street Looting Act would help protect patients and communities by holding private equity firms accountable for the consequences of their actions,” stated a press release on Senator Warren’s website.
However, Pennsylvania’s proposed legislation faces challenges. The Pennsylvania Health Care Association expressed concerns about the lack of Medicaid reimbursement rate increases for nursing homes in Shapiro’s budget proposal. Association President and CEO Zach Shamberg emphasized the difficult situation facing nursing homes, stating, “Nursing home closures, bankruptcies and ownership changes, coupled with declining occupancy driven by ongoing caregiver shortages, paint a stark picture. Our elected officials must be a true and willing partner in protecting our most vulnerable — and ensuring they continue to receive the care they deserve in their communities.” This highlights the complex interplay between financial pressures, ownership structures, and the quality of care provided in nursing homes. Beyond pre-transaction notifications, Shapiro’s proposal also aims to eliminate leaseback arrangements, which he argues often lead to “excessively high prices” that burden healthcare facilities with debt. The coming months will be crucial as Pennsylvania lawmakers debate and refine this legislation, potentially setting a precedent for other states grappling with the role of private equity in the nursing home industry.