Adam Brown, MD MBA’s Post

On Thursday of this week, Democratic lawmakers introduced U.S. legislation that would tighten the rules on healthcare private equity investing. The Health Over Wealth Act would increase the powers of the U.S. Department of Health and Human Services (HHS) to monitor and block private equity transactions in the healthcare industry. The Health Over Wealth Act has five stated objectives: 1️⃣ Require private equity-owned healthcare entities to report debt, executive pay, lobbying and political spending, patient costs, and any patient service or wage reductions. 2️⃣ Require defined entities to create escrow funds with enough cash to cover five-years-worth of operating funds to hedge against financial disruptions and to cover funds for neighboring nonprofit hospitals that take on patients during any disruption; the creation of licenses for private equity funds that want to acquire healthcare assets that HHS can revoke and then require funds to divest their asset if revoked; require asset sales to real estate investment trusts (REITs) to be reviewed by HHS. 3️⃣ Establish a task force to monitor private equity activity in healthcare and limit its influence in the sector. 4️⃣ Prohibit stripping assets that undermine care quality, safety, or access; require bankruptcy courts to place a heavy weight on healthcare entities’ plans for continuing care access and quality. 5️⃣ Close tax loopholes for REITs seeking rental income from health care properties. Earlier this year, the Federal Trade Commission, the Department of Justice’s (DOJ) Antitrust Division, and the U.S. Department of Health and Human Services launched a new investigation into private equity and other corporate investment control in the healthcare industry. More U.S. states are requiring disclosure-and-review laws for pending healthcare deals. 🔔 Follow me for updates on this topic. Disclaimer: This post is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice. #healthcare #medicine #privateequity #investing #legislation #compliance

I understand both sides of this torch-and-pitchforks bill, the same way I understood why Sarbanes-Oxley (old fogey reference) was very much a cumulative legislative response to some galling abuses by a few bad actors. But the political impact here would not be just one more enormous corporate paperwork exercise like Sarbanes-Oxley. It would certainly be that too; but it would also have a chilling effect on good-faith investments throughout health care. The scope and sweep of the law, especially the jail-the-bastards provisions, also feels as much like anti-capitalist vindictiveness as it does good regulatory policy -- which may explain why a state-level version failed to pass in ultra-blue California. But who knows. Our politics are in utter chaos right now; and with the Republican Party now cosplaying Populist when it suits them, anything is possible between now and the end of the year. "A group of Democrats led by Sen. Elizabeth Warren proposed new restrictions on private-equity firms, saying tougher rules are needed to prevent buyout firms from 'looting' the businesses they own in the wake of hospital operator Steward Health Care System’s bankruptcy... "Like the earlier bill, the revised proposal would hold buyout firms liable for debts and misconduct by companies they control, which would prevent investors from walking away unscathed when their portfolio companies fail. The new version would also cap dividend payments buyout firms can extract from their holdings and lengthen the period during which firms can be held liable for bad conduct, among other changes... "The revised Stop Wall Street Looting Act sharpens many provisions of the earlier bill, while adding a new emphasis on healthcare investments. It would cap dividend payments at 10% of total debt, and extend the statute of limitations for going after fraudulent private-equity deals. It would also put new restrictions on real-estate investment trusts’ involvement in healthcare, and require new disclosures from private-equity firms that accept any federal money."

The Reintroduction of the Stop Wall Street Looting Act The recent bankruptcy of Steward Health Care has reignited discussions around the Stop Wall Street Looting Act. This legislation, championed by Senator Warren, aims to curb the detrimental practices of private equity firms. These takeovers often lead to job losses, company closures, and significant harm to essential sectors like healthcare. The bill represents a renewed effort to bring regulation to the private equity industry. #PrivateEquity #Healthcare #Legislation #EconomicReform https://lnkd.in/gieuYQS4

'We need to do more to understand the impact of private equity and corporate deal-making on our policymaking, regulatory decisions and enforcement actions,' HHS Secretary Xavier Becerra says. Read the story here to learn more: https://okt.to/4CVrQg #RCW #RegulatoryComplaince #PrivateFunds #PrivateEquity

The nation’s private equity fund assets have more than doubled over the past 10 years, totaling $8.2 trillion last year. A recent report from the American Hospital Association shows that private equity firms account for 56% of all physician practice acquisitions since 2019. This is concerning with private equity firms accounting for more and more physician practice ownership. “My Corporate Crimes Against Health Care Act would prevent what happened with Steward from ever happening again,” Warren said in a statement. “When private equity gets hold of health care systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences.” If passed, the act would establish a new criminal penalty of up to six years in prison for private equity executives whose business decisions result in a patient’s death.  This is an important provision in the proposed act- Should a healthcare portfolio company experience serious, avoidable financial difficulties as a result of their private equity ownership, the bill would allow the Department of Justice and state attorneys to claw back all compensation issued to private equity and portfolio company executives within a 10-year period before or after those financial difficulties begin. There would also be an associated civil penalty of up to five times the clawback amount, the bill stated. This summarizes the "grab the money while you can" mentality of PE companies: Mona Shah, Community Catalyst’s senior director of policy and strategy, stated that private equity is a “metastasizing disease” that continues to harm the country’s healthcare delivery system. Time to hold PE firms in healthcare accountable to residents, patients, and the community. Look what Stuart Healthcare did to their hospitals in MA. https://lnkd.in/d6hGNShK #PE, #privateequity, #getitwhileyoucan, #moneygrab, #grabitwhileyoucan, #profitsfirst

Private Equity and the Future of Accountancy Practices. The growing trend of private equity firms acquiring accountancy practices raises critical questions. While these deals can bring investment and efficiency, they often come with concerns around short-term profit maximisation, potentially undermining client relationships and staff welfare. The recent piece in The Guardian highlights the potential risks, referring to a “slash-and-burn” approach that could have long-term implications for the profession. Is private equity the future for accountancy, or should we be cautious of its impact? https://lnkd.in/eUnB2f2V

A bipartisan group of more than 55 state lawmakers and candidates have already signed the ReimagineCT policy pledge. The 12-point package of policy solutions address the high costs of living and running a business, expand career pathways, foster innovation, and grow a vibrant economy with opportunities for all residents. Connecticut State Senate Democrats Connecticut Senate Republicans Connecticut Democrats Connecticut House Republicans #connecticut #workforcesolutions #affordability #smallbusiness #innovation #reimagineCT

In his book "The Evolution of Cooperation," Robert Axelrod explains how a small, cooperative group can win, grow, and thrive within a larger uncooperative or even toxic environment. The fact that cooperation is the long-term winning strategy for social creatures gives the small group the edge. I spotted an example of cooperation in this Washington Post story about the U.S. House of Representative's Select Committee on the Modernization of Congress. It's evenly split Republican / Democrat and requires a super majority to approve anything. And yet, they have their colleagues saying things like, “If all of Congress could operate the way that the modernization committee has, the nation would be in a much better place.” What did this small group of cooperators do differently? --They accepted each other as people, not partisans. --They sat at a round table, mixing Democrats and Republicans, not on opposite ends of a dais. --They came together at the start of the session in a bipartisan planning retreat. --They hired one bipartisan team of staffers together. --They occasionally met for dinner together. --They talked with each other honestly about tough topics, like Jan 6. It all sounds like simple, social stuff. But maybe we need to build more socialness into Congress before we can build more of it in the nation.

Via Amanda Bronstad, Ross Todd, and Lisa Willis: President Joe Biden stepped down less than three months ago as the Democratic candidate after a disastrous debate performance raised questions about his potential cognitive decline. But it wasn't just Biden, 81, whose age was in the spotlight. "As of last year, nobody was eyeing all of us like vultures, circling, wondering when we were going to go off to the rest home," Elizabeth Cabraser, 72, told Law.com. Cabraser, of San Francisco's Lieff Cabraser Heimann & Bernstein, calls it the "Biden effect." "It's weird to think that this crisis suddenly occurred with respect to a sitting president and a candidate for reelection," she said. "But, all of a sudden, people are looking at us, going hmmm … I don't know. She seems coherent today, but who knows?" It's a conversation coming up more often among practicing lawyers who are approaching their 70s or, in some cases, are well into that decade of their life. Many who started practicing decades ago don't want to retire or play golf. William Lee, 74, of Wilmer Cutler Pickering Hale and Dorr, decided to stop trying cases at the end of 2022 after a stretch of seven trials in less than a two-year span. "I'm a big believer that it's better to go before people want you to go," Lee said. "You don't want to be the person who someone says, 'Wow, he used to throw 95 miles an hour. Now he's throwing 80,' or 'He used to be good.'" He added, "Trial work is—not to engage in age discrimination—younger people's work." Michael Rhodes, 66, of Cooley, received a waiver from a firm policy forcing partners to give up their equity stake the year they turn 65. But after getting that waiver, he says he decided 40 years of practice "sounded like a nice number" and decided to retire from the firm at the end of this year. "I think your ego gets so tied up with that identity that I think a lot of people like me have a lot of fear of letting it go. 'I won't be relevant. I won't be known,'" Rhodes said. "I actually want the opposite. I want to explore: 'Who are you, separate and apart from that identity?'" 𝗥𝗲𝗮𝗱 𝘁𝗵𝗲 𝘄𝗵𝗼𝗹𝗲 𝘀𝘁𝗼𝗿𝘆: https://lnkd.in/ezzjvsBb (L-R: Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein, William Lee of Wilmer Cutler Pickering Hale and Dorr, Michael Rhodes of Cooley.)

Thursday 3️⃣ In this week's #Thursday3, we covered Point72 Ventures and Andreessen Horowitz DC expansion plans, policy risks driven by scrutiny of #privateequity and what the #2025TaxCliff means for health coverage. ➡ VC - Point72 Ventures and Andreessen Horowitz Expand DC Presence; Signals Why Policy Engagement is Crucial for Start-Ups. Readthroughs for start-ups from this big step forward on DC engagement from VCs and how Jones Point can help companies operating in #regulatedmarkets. ➡ PE - Drumbeat Continues - Congressional Action Comes Into Focus. With the backdrop of another week of negative headlines, including today's The Wall Street Journal story and California legislative risk, we discuss policy takeaways from last week's House Ways and Means Committee and House Budget Hearing on #privateequity and #consolidation in healthcare. ➡ DC - 2025 Tax Cliff Front and Center - Healthcare and HIX Impacts Are At the Top of the List. We discussed why next year's tax debate will have a significant impact on health policy and flagged Paragon Health Institute's recent piece on tax policy options for healthcare. Full Post: https://lnkd.in/eDQK-8Av Subscribe Here: https://lnkd.in/eJMyC4Gj This week's #Thursday3 is powered by the Healthcare Capital Markets & Innovation Summit LLC Capital Markets & Innovation Summit. For more info - click on the link below. Interested in attending? Use discount code HCMIS24JP to register.