HB 6873 Testimony

The Private Equity Stakeholder Project (PESP) urges the Connecticut General Assembly to pass HB 6873, arguing that private equity's business model—characterized by high debt and profit extraction—threatens healthcare stability. PESP cites the 2025 bankruptcy of Prospect Medical Holdings, which owns three Connecticut hospitals, as a primary example of how private equity ownership can lead to financial distress and diminished care quality. The testimony highlights that in 2024, 21% of healthcare bankruptcies involved private equity-owned companies. PESP supports HB 6873 because it would expand the 'notice of material change' statute to include joint ventures and sale-leaseback transactions, preventing firms from evading antitrust scrutiny or stripping assets through real estate deals.

• Private equity has invested more than $1 trillion in the US healthcare sector over the last ten years, impacting various areas including hospitals, emergency medicine, dentistry, and behavioral health.
• Private equity ownership is strongly linked to healthcare bankruptcies; in 2024, 21% of all healthcare bankruptcies involved private equity-owned firms, and 88% of the largest bankruptcies (those with liabilities exceeding $500 million) had a history of private equity ownership.
• Prospect Medical Holdings, which owns Waterbury Hospital, Manchester Memorial Hospital, and Rockville General Hospital in Connecticut, filed for bankruptcy in January 2025 following years of financial mismanagement under private equity firm Leonard Green & Partners.
• Under the ownership of Leonard Green & Partners between 2010 and 2021, Prospect Medical Holdings' owners extracted at least $658 million in dividends and fees, including a $460 million dividend in 2018 despite a $244 million net loss that year.
• The financial extraction from Prospect Medical Holdings coincided with severe operational failures, including low CMS quality ratings, 'immediate jeopardy' conditions in Connecticut hospitals, and a settlement with the California Attorney General over 'gross negligence' regarding mold contamination in a pharmacy.
• Private equity firms use specific financial strategies to extract value, such as sale-leaseback transactions where real estate is sold to a REIT to pay off debt, replacing ownership with long-term lease liabilities.
• HB 6873 is supported because it would require reporting of 'material transactions' to the Attorney General, specifically capturing joint ventures and real estate sale or lease agreements involving 20% or more of a healthcare entity's assets.

APA

Noble, C. (2025). HB 6873 Testimony. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2025/06/3-3-25-PESP-Testimony-CT-HB-6873.pdf

Chicago

Noble, Chris. HB 6873 Testimony. Private Equity Stakeholder Project, 2025. https://pestakeholder.org/wp-content/uploads/2025/06/3-3-25-PESP-Testimony-CT-HB-6873.pdf.

Wikipedia

{{cite press release |last1=Noble |first1=Chris |title=HB 6873 Testimony |publisher=Private Equity Stakeholder Project |date=3 March 2025 |url=https://pestakeholder.org/wp-content/uploads/2025/06/3-3-25-PESP-Testimony-CT-HB-6873.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{noble20256873, author = {Noble, Chris}, title = {{HB 6873 Testimony}}, publisher = {Private Equity Stakeholder Project}, year = {2025}, month = mar, url = {https://pestakeholder.org/wp-content/uploads/2025/06/3-3-25-PESP-Testimony-CT-HB-6873.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }