S-4085-119
Read twice and referred to the Committee on Finance.
Sponsored by Christopher Murphy (D-CT)
What it does
This bill would amend the Social Security Act to prohibit Medicare payments to any hospital or skilled nursing facility owned or controlled by a private equity fund, a corporation controlled by a private equity fund, or a real estate investment trust (REIT). "Control" is defined broadly to include direct or indirect ownership of 10% or more of voting securities, management contracts, or similar arrangements. Facilities already under such ownership at the time of enactment would have a 3-year grace period to come into compliance before losing Medicare eligibility.
Who benefits
Medicare patients who supporters argue would receive higher-quality care at non-private-equity-owned facilities. Nonprofit and public hospital systems that compete with private equity-backed facilities and could gain market share. Hospital workers at non-private-equity facilities who may face less competitive pressure to cut staffing. State and local governments that operate public hospitals. Academic medical centers and community hospitals not subject to the ban. Researchers and policymakers who have raised concerns about private equity ownership in healthcare.
Who is hurt
Private equity funds and REITs with current hospital or skilled nursing facility holdings, who would face loss of Medicare revenue — the dominant payer in most hospital markets. Patients in areas where private equity-owned hospitals are the primary or sole provider, who could lose access to care if facilities close or exit Medicare. Hospital employees at affected facilities who may face layoffs or facility closures. Investors in private equity funds and REITs with healthcare exposure. Rural and underserved communities where private equity has sometimes acquired struggling facilities that other owners declined to operate. Lenders and bondholders with debt secured by affected facilities.
Supporters argue
Supporters argue that peer-reviewed research — including studies published in JAMA and the New England Journal of Medicine — has found that private equity acquisition of hospitals and nursing homes is associated with increased patient mortality, higher rates of hospital-acquired infections, and reduced staffing levels. They contend that because Medicare is a federal program funded by taxpayers, Congress has both the authority and the obligation to ensure its dollars do not flow to ownership structures that evidence links to patient harm, and that the 3-year transition period gives affected owners adequate time to divest rather than abruptly disrupting care.
Opponents argue
Opponents argue that the bill applies a blanket ownership-based disqualification rather than targeting specific poor-performing facilities, meaning high-quality private equity-owned hospitals would lose Medicare funding alongside low-quality ones. They contend that in rural and underserved markets, private equity has sometimes been the only willing buyer for financially distressed hospitals, and that forcing divestiture could cause closures and eliminate care access for vulnerable populations. They further argue that the research linking private equity ownership to worse outcomes does not uniformly control for the pre-existing financial distress of acquired facilities, making causation uncertain.
Constitutional context
Congress has broad authority under the Taxing and Spending Clause (Art. I, §8, cl. 1) to set conditions on participation in federal programs like Medicare. NFIB v. Sebelius (2012) affirmed this power but also established that funding conditions cannot be so coercive as to leave recipients no genuine choice; however, that limit has primarily been applied to conditions on states, not private entities. Post-Loper Bright (2024), any regulatory definitions the Secretary of HHS issues to implement the bill's broad "control" definition would face independent judicial scrutiny rather than deference.
Checks and balances
Congress gains authority to define which ownership structures may participate in Medicare; HHS implements and enforces the ban; affected facilities retain due process rights through the notice-and-hearing requirement referenced in Section 1128(f), and may seek judicial review of disqualification decisions.
Historical precedent
Congress has previously conditioned Medicare and Medicaid participation on ownership disclosure and anti-kickback compliance, but no prior federal law has categorically excluded an entire class of ownership structures from Medicare participation.