WHEREAS:

In the years leading up to the pandemic, acquisitions of not-for-profit hospitals by private equity firms soared with more than $1 trillion invested in the past decade; and

WHEREAS:

Private equity firms generate revenue by charging management fees to investors, focusing on high revenue procedures, cost cutting, staff reductions, technical innovation and financial reorganization; and

WHEREAS:

There are increasing concerns that private equity investors and other for-profit companies strip hospitals that they take over to the bare bones; recapitalize debt by taking out loans and then making large contributions to themselves and to the firm's executives with the proceeds of those loans; and

WHEREAS:

Private equity firms that acquire hospitals also engage in expensive real estate sales and lease-leaseback transactions that include selling off the real estate holdings of the hospital that leave the hospital with above-market, long-term leasing obligations and without assets like land, buildings and equipment to attract other purchasers or investors should the hospital face closure or bankruptcy; and

WHEREAS:

All of these practices are designed to maximize return and enrich the investors and executives at the expense of patient care, safety, providing a wide range of health care services to the community and the livelihoods of the health care workers; and

WHEREAS:

A new study led by Harvard Medical School and published in December of 2023 found that Medicare patients at hospitals owned by private equity had a 27% increase in falls, a 25% increase in medical complications and 38% more bloodstream infections than Medicare patients at hospitals not owned by private equity; and

WHEREAS:

Previous studies also found that private equity's acquisition of hospitals led to higher charges, increased costs and more government spending for the same health care services; and

WHEREAS:

AFSCME members who work in hospitals run by private equity firms face chronic staff shortages, a lack of supplies and equipment and job insecurity due to hospital closures, bankruptcies and the elimination of hospital departments that used to provide specialized health care services to the community; and

WHEREAS:

There is a lack of regulation at the state and federal level of private equity hospital acquisitions requiring advanced notice of and publication of the terms of the takeover deal; standards for patient care, safety, staffing levels and health care services to be provided and maintained; publication of the amount of the initial investment by the private equity firm and the amount of debt accumulated by the hospital over time; community hearings or other forms of community involvement; or protections for the interests of other stakeholders including patients, taxpayers, employees, suppliers and insurers; and

WHEREAS:

The proposed Health Over Wealth Act, sponsored by U.S. Senator Edward Markey (D-Mass) would require private equity and other for-profit hospital owners to file annual reports with the U.S. Department of Health and Human Services showing (a) level of debt; (b) fees collected by the private equity firm; (c) dividends paid by the hospital to the private equity firm; (d) the amount of interest paid on the debt; (e) real estate, mortgage and lease payments; (f) transactions with service providers and suppliers and vendors; (g) staffing levels, staff to patient ratios, and number of job vacancies; (h) number of beds in use and capacity and services provided; and (i) closures. The legislation would also require the private equity firm to establish an escrow fund in amounts to cover operating and capital expenditures for five years in the case of a closure and additional funds to the community to mitigate the impact of possible closures on quality of care, workplace understaffing, reductions in services or access to services. Finally, the legislation would require advanced notice and publication of the terms under which a private equity firm proposes to purchase or take over a hospital(s) and advance notice of any closure or reduction in essential services.

THEREFORE BE IT RESOLVED:

That AFSCME and its affiliates oppose the acquisition of hospitals by private equity and other for-profit companies unless such investment is needed on an emergency basis to keep the hospital operating and there are no interested not-for-profit hospital systems or other institutions that are interested in purchasing or acquiring the hospital; and

BE IT FURTHER RESOLVED:

That AFSCME and its affiliates work for passage of the Health Over Wealth Act; and

BE IT FINALLY RESOLVED:

That AFSCME and its affiliates propose and/or support legislative or administrative action at the state level to strengthen the regulation of private equity investment in hospitals around the country in ways that are consistent with the provisions of the Health Over Wealth Act.

SUBMITTED BY:
R. Sean Grayson, President   
David Kovacs, Recording Secretary
AFSCME Council 8
Ohio