HARRISBURG — As hospital closures and consolidations across Pennsylvania create health care deserts and powerful monopolies, a bipartisan faction of lawmakers wants to empower the state to dig deeper into these transactions before they happen.
At least 26 hospitals owned by nonprofits and for-profit companies have closed across the commonwealth in the past five years, according to data collected by the Pennsylvania Health Access Network. In the same period, at least 46 hospitals changed ownership.
These closures know no geographic or partisan bounds. Communities from Mercer to Clinton to Delaware Counties have faced the sudden shuttering of health facilities, along with the accompanying care shortages and job losses.
“When your communities are hurting, it doesn't matter whether they're Republican or Democrat, it's people that are hurting,” said state Rep. Lisa Borowski (D., Delaware).
Borowski wants to require nonprofit and for-profit operators to report major proposed mergers and acquisitions to the Pennsylvania attorney general. The attorney general would then be tasked with reviewing the proposal and taking legal action if they determine it’s not in the public’s best interest.
Under current law, the attorney general can intervene in any transaction involving a charity in the name of protecting the public interest. However, they often learn about sales or bankruptcies too late to step in.
That was the case with Delaware County’s Crozer system, which recently closed two hospitals. Former Attorney General Michelle Henry sued Crozer’s private equity owner for breaking the terms of the sales agreement in 2024 — almost a decade after the acquisition happened. By then, Prospect Medical Holdings had already closed various wards.
Democratic Gov. Josh Shapiro supports the concept, saying in his February budget address it would allow the office he once led “to review … intentions carefully, comprehensively, and with the community’s best interest at the forefront.”
But in his remarks, Shapiro highlighted a single type of owner for scrutiny — private equity, which he said “has infected our health care system” and treats Pennsylvania hospitals like “a piggy bank they can empty out and smash on the floor.”
He reiterated that position at a news conference last week when asked about the Crozer closures: “The legislature needs to move forward, I believe, on passing these private equity reforms.”
A private equity-only approach would create a carve-out for the state's numerous and powerful nonprofit health systems, including UPMC, the state’s largest private employer. These systems are represented by a powerful lobby that publicly opposed Borowski’s proposal last session.
A Shapiro spokesperson did not respond to a request for comment about whether the governor supports additional oversight for nonprofit health care transactions.
Private equity firms drive closures, but they aren’t alone
Private equity’s desire for quick profit causes unique problems for health care, according to Rachel Werner, executive director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania.
“There’s a lot of money being taken out of direct patient care and being put in the hands of shareholders,” Werner told Spotlight PA.
Proponents say private equity is a crucial supporter of the health care industry. In a letter to U.S. senators last year, the American Investment Council, private equity’s trade group, argued that firms “bring managerial innovation in a sector in dire need of reform” and provide capital for everything from pharmaceutical research to urgent care.
But profit incentives are there, and critics argue they lead to abrupt and preventable closures.
Take Crozer: The four-hospital nonprofit system was formed in the 1990s, and amid financial woes, was acquired by the for-profit Prospect Medical Holdings in 2016 for $300 million, mostly to help pay off the system’s pension debt.
As a term of the sale, Prospect, which operates hospitals across the country, agreed to invest $200 million to improve facilities, maintain charity care and community wellness programs, and keep Crozer’s doors open for at least five years.
Two years later, Prospect took out a $1 billion loan against its real estate holdings to finance at least $457 million in dividends to its shareholders like Leonard Green & Partners, a Los Angeles-based private equity firm, according to a 2024 complaint filed by Henry.
To pay off the debt accrued, Prospect sold Crozer’s real estate to another company, which charged the system $35 million in rent a year.
Such a procedure is known as a sale-leaseback. Shapiro called for such arrangements to be banned in his budget address. Those payments, alongside other undisclosed management fees, helped further destabilize the system and led to its bankruptcy, Henry argued.
The exact scale of the problem is difficult to know, Werner noted. Few states track health care ownership, and the transactions are often private.
But an analysis of media reports by the Pennsylvania Health Access Network (PHAN) shows issues aren’t limited to private equity.
Of the 46 hospitals identified by PHAN that changed ownership from 2020 to the present, 98% were acquired by health care systems incorporated as nonprofits. In the same period, nonprofit systems were behind 64% of the hospital closures included in the analysis.
“Private equity has been problematic,” Patrick Keenan, a PHAN policy analyst, told Spotlight PA, but “it's not the only entity being problematic. And a holistic solution that addresses all the drivers of closure … is the best strategy.”
Werner said studies have found that consolidation, including among nonprofits, gives large health care systems leverage to increase their reimbursement rates from insurers.
Those costs are borne by employers who purchase health care plans and are then passed on to their workers through higher premiums.
This monopoly power extends beyond the exam room. For instance, SEIU Healthcare, a union representing nurses and other hospital workers, has argued in court that UPMC uses its size to lower workers’ wages.
Politically, it might be easier for lawmakers to crack down on private equity in health care, rather than all the drivers of hospital closures and consolidations.
Private equity has a limited presence at the state Capitol. The American Investment Council paid a single lobbyist $30,000 in 2024, according to state disclosures. The council does not maintain a political committee in Pennsylvania that makes donations to state lawmakers, and only a handful of firms and executives have made limited donations.
The Hospital and Healthsystem Association of Pennsylvania (HAP), meanwhile, employed four different firms in 2024, racking up $1.1 million in direct lobbying expenditures. Individual hospitals and systems separately spend millions employing lobbyists.
HAP’s political action committee, as well as hospital executives from across the commonwealth, routinely give hundreds of thousands of dollars to state lawmakers in the form of campaign donations.
HAP opposed Borowski’s bill last session, saying in an October letter to legislators that it was a duplicative proposal that only increases hospitals' regulatory burden when half operate at a loss.
“In this environment, mergers and acquisitions are necessary tools to invest in struggling hospitals and preserve access to care in every Pennsylvania community,” the association wrote.
Werner, of Penn, agreed that acquisitions may help struggling health facilities keep their doors open longer by reducing duplicative administrative costs. However, she argued that the public benefits end there.
During a recent legislative hearing on hospital sustainability, HAP CEO Nicole Stallings said there are many other ways to preserve health care access.
She implored lawmakers to increase the state’s reimbursement rates to hospitals for treating publicly insured patients, which currently sit around 82 cents on the dollar. According to a 2022 study from the Commonwealth Fund, a foundation that supports low-income health care access, Pennsylvania’s Medicaid payments to providers are ranked 43rd in the country.
She also called for the General Assembly to reduce the threat of medical malpractice lawsuits and put more state resources toward mental health to free up emergency rooms that often receive patients with no other alternatives.
Borowski’s bill passed the state House with bipartisan support by a vote of 114 to 88 last year, then unanimously advanced out of committee in the state Senate. However, GOP leaders in the upper chamber never called it up for a final vote.
As businesses and consumers suffer under the weight of higher medical costs, some of the legislature's most conservative lawmakers, such as state Sen. Dawn Keefer (R., York), said addressing the growing market power of large hospital systems is a priority.
“When you talk about monopolies, that's not capitalism, that's not free market,” Keefer told Spotlight PA.
As a member of the state House, she voted for Borowski’s proposal last session and is working with a GOP colleague to author a similar proposal. For Keefer, carving out any one ownership model over another is a nonstarter.
“Why bother then?” Keefer asked. “What kind of impact is [the policy] going to have?”
