In response to the financial turmoil affecting hospitals in Rhode Island, state legislators are taking significant steps to address the influence of private equity in healthcare. On February 10, 2024, both the Rhode Island House and Senate voted to approve an $18 million state loan guarantee aimed at preserving two critical safety net hospitals: Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence. This funding is intended to facilitate the purchase of these hospitals, currently owned by an out-of-state private equity firm that has declared bankruptcy.
Legislators are concerned that the situation at these hospitals could be a precursor to wider instability in Rhode Island’s healthcare system. Senator Linda L. Ujifusa, a member of the Portsmouth Democratic Party, stated, “We have important hospitals that are at risk of following the same path as Fatima and Roger Williams.” She highlighted that other facilities, such as South County Hospital, are also experiencing financial difficulties. Ujifusa emphasized the need to transition from reactive measures to proactive prevention in healthcare.
The rise of private equity in healthcare has raised alarms nationally, particularly after Massachusetts Governor Maura Healey enacted a groundbreaking law designed to monitor and limit private equity’s role in the hospital industry. This legislation aims to curtail the profit-driven practices that some argue have led to the financial collapse of organizations like Steward Health Care, resulting in the closure of hospitals and significant patient harm.
While Ujifusa noted that Rhode Island’s proposed legislation would not match the comprehensive measures of Massachusetts, it aims to create a “transparency and early warning” system. This would require healthcare entities to submit essential financial and organizational information to the attorney general and the state Health Department prior to any transactions. The state would then review these transactions to ensure they do not lead to reduced competition or harm patient access and quality of care.
The proposed legislation seeks to enhance the authority of the attorney general and the Health Department under the existing Hospital Conversions Act and relevant anti-trust laws. Representative Kathleen A. Fogarty stated, “This legislation strengthens transparency, oversight and accountability for private corporate actors that can currently extract profits from Rhode Island health care providers with little public scrutiny.”
Ujifusa pointed out that the crises at both Our Lady of Fatima and Roger Williams Medical Center reflect broader trends affecting healthcare across the United States. “Private equity has harmed hospitals across the country, including next door with Massachusetts and the Steward hospitals,” she said. She firmly asserted that healthcare should not be treated merely as a business, emphasizing the fundamental right to health and the need to prioritize public welfare over profits.
The proposed measures are informed by model legislation from the National Academy for State Health Policy and research from the Center for Advancing Health Policy through Research at Brown University School of Public Health. Ujifusa highlighted the interconnectedness of healthcare in Rhode Island, noting that the closure of any hospital significantly impacts the entire community. For instance, the closure of Memorial Hospital in Pawtucket led to increased patient volumes at nearby facilities.
Given the lack of federal regulations governing private equity’s involvement in healthcare, state-level actions are crucial. In addition to the loan guarantee, Ujifusa and Fogarty have also introduced the Rhode Island Ban on the Corporate Practice of Medicine Act. This legislation aims to prohibit entities without healthcare provider licenses from owning medical practices or influencing clinical decisions. They argue that corporate consolidation can undermine clinical independence and obscure accountability for patient outcomes.
Ujifusa expressed concern that corporate control can shift resources away from patient care toward shareholder profits. “When profit comes before patients, people get hurt and lives are put at risk,” she stated. The proposed legislation seeks to ensure that healthcare remains focused on patient welfare rather than corporate gain, a stance that both legislators believe is essential for the health of all Rhode Islanders.
As Rhode Island moves forward in addressing these critical issues, the implications of these legislative actions could resonate beyond state borders, potentially shaping the future of healthcare governance across the nation.
