Private equity groups have solidified their position as stakeholders in healthcare as investments continue to grow in both size and scope.
Between 2018 and 2022, global health care investments reached $446 billion, and in 2024 alone, global healthcare deal values were estimated at $115 billion, according to an article published May 11 in The American Journal of Managed Care.
But in the wave of numerous PE-related closures, bankruptcies and contracting battles over the last year, several states have recently taken action to more strictly regulate PE activity in healthcare.
Here are the three latest states to increase their scrutiny of healthcare PE:
Connecticut
Connecticut Governor Ned Lamont signed SB 196 into law May 27, establishing the first statewide ban in the country on hospital sale-leaseback transactions — arrangements in which a hospital sells its real estate to an investment trust and then pays rent on property it formerly owned.
According to a June 1 report by the Private Equity Stakeholder Project, the law came to fruition directly in response to the collapse of Los Angeles-based Prospect Medical Holdings, the PE-backed portfolio that operated multiple hospitals in the state before filing for bankruptcy in 2025.
The law also takes aim at the ability of investors to shape hospital operations without holding an outright ownership majority, through mechanisms such as board appointment rights, veto powers or conditional debt agreements.
Beyond the real estate ban, the law requires hospitals to regularly certify that no PE entity holds a controlling interest or governance authority over hospital operations or clinical matters. Investors are explicitly barred from interfering with clinicians’ professional judgment regarding patient care, discharge, diagnosis and testing.
Illinois
Illinois recently advanced two separate bills — HB5000 and HB4828 — both aimed at increasing oversight of PE in healthcare and disability services. Both bills are awaiting a final signature from Governor J.B. Pritzker.
HB50000 strengthens oversight and transparency requirements related to transactions and ownership changes. It specifically addresses disruptions to care at safety-net healthcare systems at the hand of PE-backed hospital operators. A June 1 report by PESP cited the closures of Melrose Park-based Westlake Hospital, Chicago-based Weiss Memorial Hospital and West Suburban Medical Center as part of what fueled the bill’s creation.
HB4728 is designed to protect intellectual and development disability services from disruptive financial practices. It would amend the Community Living Facilities Licensing Act and several related pieces of legislation to require asset management companies and their subsidiaries to make certain disclosures about the company’s assets, debts and other matters.
Vermont
The state legislature advanced House Bill 583 in May, which was originally aimed at prohibiting PE groups or hedge funds from owning or controlling medical practices altogether. That provision was removed from the most recent version of the bill.
According to a May 13 report by VT Digger, the Vermont Health Care Advocate’s Office originally proposed the bill as a safeguard in response to the collapse of Dallas-based Steward Health Care.
The current version of the bill still bars PE from interfering with clinical decision-making and institutes public reporting requirements for healthcare organizations to disclose ownership and investor information.
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