More states are imposing new laws to add oversight of private equity (PE) in healthcare, including nursing homes.
As a result, the number of PE-involved healthcare deals declined since least year, according to a report in Pitchbook, and the value of those deals in the first half of this year is lower than this time in 2025.
California, Oregon and Rhode Island each had laws or regulations that take effect this year requiring more documentation and transparency when it comes to mergers, acquisitions and other deals in the healthcare sector.
Connecticut targeted PE in the nursing home sector in particular, passing what is considered to be one of the strongest laws in the country to address accountability and transparency for PE-owned nursing homes, a story in Stateline noted.
Connecticut Gov. Ned Lamont in June signed the state measure requiring nursing homes owned by PE to disclose their financial dealings with the state. The measure also band PE firms from controlling day-to-day care decisions about nursing home residents.
Gov. Lamont signed another bill that curbs PE influence in hospitals, as a result of hospital closures spurred by PE-owned health group financial decisions.
Proposed bills in Hawaii, Indiana, New York, Pennsylvania, Vermont and Virginia add transaction oversight and limit how PE can operate.
Overall, such state laws and regulations have resulted in longer and more costly deals across the care continuum, according to PitchBook analysts. Consolidation is harder to do under tight state scrutiny.
PE investors have spent $1 trillion acquiring healthcare companies in the past 10 years, according to the Commonwealth Fund. PE proponents say such investments fill critical gaps in the healthcare system, adding capital to upgrade technology and streamline processes.
Government and academic studies, meanwhile, found that PE involvement in nursing homes increased the death rate by 11%, and that PE is linked to increases in emergency room visits and rising Medicare costs. And almost 90% of financially stressed healthcare companies are owned by PE, according to a 2022 Moody’s Investors Service report.
At least 25 states have proposed or passed laws increasing healthcare transaction oversight and restricting the power of companies to control operations if the companies aren’t run by physicians.
