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March 26, 2021

Ways and Means Subcommittee hearing on examining private equity's role in US health care system

On March 25, the House Ways and Means Oversight Subcommittee held a hearing entitled, "Examining Private Equity's Expanded Role in the U.S. Health Care System." In opening the hearing, Subcommittee Chairman Bill Pascrell (D-NJ) outlined committee Democrat's concerns with how private equity ownership "affects patient safety, cost, and jobs," while Subcommittee Ranking Member Mike Kelly (R-PA) made it clear committee Republicans do not think now is the time to explore this issue. Instead, Republicans focused on the need to examine data coming out of nursing homes during the pandemic, and specifically demanded accountability for states they say put seniors at risk due to policies of sending COVID-19 positive patients back into nursing homes.

Democrats on the committee focused their questions on learning more about the impact of private equity on nursing homes, along with the need for more transparency and oversight into these businesses. Sabrina Howell, Assistant Professor of Finance at New York University Stern School of Business, noted the increase in deals in the private equity space and said researchers and the public need more transparency into their ownership, expenditures, and staffing to assess the impact on patient outcomes. Several Democrats on the committee noted their support for the Transparency in Health Care Investments Act (H.R. 5825), which was reported out of committee last year, and Rep. Lloyd Doggett (D-TX) said he will have a bill establishing a multiagency taskforce to analyze quality metrics at nursing homes. Rep. Pascrell said the ratings system itself "is fraud," with Ernest Tosh from Tosh Law Firm saying they are exploring fraudulent ways private equity ownership leads to up coding, increases length of stay, and work to achieve higher star ratings to get more money out of Medicare. Regarding concerns on health equity, Terris King from King Enterprise Group said that he is concerned existing inequities will be exacerbated when profits are the focus over patients, in particular when it comes to safety-net hospitals and minority communities.

Republicans expressed their disappointment with the hearing's focus, with Jackie Walorksi (R-IN) expressing her outrage that Republican states were getting bashed in the press for doing things like opening their beaches, while Democratic states were being applauded for their response and not being held accountable for "reckless actions" that encouraged the spread of COVID-19 in nursing homes.

Additional information is available in the attached Tax Alert.


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Washington Council Ernst & Young
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Ways and Means Subcommittee hearing