HARRISBURG — The powerful lobby for Pennsylvania's nursing homes wants to exclude the industry from a bill that would require deeper review when private equity seeks to acquire health care facilities.
The proposal passed the state House in June, but the Republican chair of a Senate committee hasn't brought it up for consideration. That lawmaker says negotiations are underway, though his Democratic counterpart has raised concerns that industry pressure will further weaken the legislation.
“I don't understand why it's such an issue to review them, where we've gone through great strides to try to make the process as streamlined as possible,” state Sen. Tim Kearney (D., Delaware) told Spotlight PA.
Nursing homes are the second sector to voice concerns with the proposal, which is designed to stave off painful health care closures driven by Wall Street profit-seeking.
As introduced last session, it would have allowed the state’s attorney general to review and then block an acquisition of any health care facility if the transaction was “against the public interest.”
Backers in the Democratic-led state House agreed to reduce the bill’s scope this session after hospitals lobbied to exclude nonprofit health care transactions.
Communities from Mercer to Clinton to Delaware Counties have faced the sudden shuttering of hospitals and medical centers, along with the accompanying care shortages and job losses.
Nursing homes face similar headwinds, such as Genesis HealthCare, a national nursing home chain with dozens of locations in Pennsylvania. A private equity firm specializing in health care invested more $100 million in the chain, but Genesis still declared bankruptcy in July, with billions of dollars of debt.
The company did not respond to a request for comment from Spotlight PA, but executives told WHYY that low state reimbursement rates through Medicaid were a culprit. Now, amid the company’s bankruptcy, a buyer affiliated with the same private equity firm seeks to acquire Genesis in full.
“From our point of view, that really just goes to show that the nursing homes and their patients need the protection from financial exploitation,” Kearney said.
The bill was proposed by Delaware County lawmakers in response to the bankruptcy and closure of Crozer Health, and is backed by Democratic Gov. Josh Shapiro. It passed the lower chamber after supporters agreed to exclude nonprofits and increase the review threshold from $5 million to $10 million; they argued that compromise was necessary to get it through the divided General Assembly.
“One hundred twenty-one yes votes is nothing to sneeze about these days,” state Rep. Leanne Krueger (D., Delaware) said after the proposal passed. She added that changes to the bill were made “in an effort to build bipartisan support for an issue that should not be political.”
Now, nursing homes seek changes to it.
The Pennsylvania Health Care Association, which represents over 400 non- and for-profit providers that care for older adults, sent a letter to the state House Health Committee before the proposal’s first vote in June. It argued that the bill would duplicate Pennsylvania Department of Health regulations that were adopted under former Gov. Tom Wolf to monitor changes of ownership in nursing homes.
Under those rules, developed with the industry earlier this decade, the department must collect information on any individual or firm that acquires a 5% stake in a nursing home, its real estate, or any debt that uses the former as collateral for a loan.
The department must then review the prospective owners’ past performance before approving or denying their application to take over or gain a stake in a nursing home. (A spokesperson for the Department of Health told Spotlight PA that it has processed 112 applications under this rule since October 2023, accepting all but five.)
“It would be more efficient and effective to continue to rely upon the existing regulatory approval processes of DOH instead of advancing this legislation, which will likely create longer pre-closing review periods, increased disclosure requirements, extended transaction deadlines with accompanying unnecessary expenses, and measurable risks to various parties,” the letter from the association said.
In an email, Shapiro spokesperson Manuel Bonder said existing rules allow for regulators to “assess clinical standards for safety, care, and operations,” while the bill “would provide critical review and oversight of transactions involving health care facilities.”
“The focus of this legislation, and the goal of this additional oversight, is to ensure that health care facilities in Pennsylvania have the resources to provide care and keep the promises they make when transactions occur — and to prevent nefarious owners and operators from continuing to squeeze facilities for profit, file for closure and bankruptcy, and abandon Pennsylvania communities,” he continued.
Zach Shamberg, president of the nursing home association, told Spotlight PA that private equity has a stake in only 5% of the commonwealth’s elder care facilities, and that such owners often bring necessary cash infusions to struggling homes.
Bankruptcies, he added, are coming from “inadequate” Medicaid reimbursement rates, workforce shortages, a “burdensome” regulatory environment, and “a punitive legal environment.”
He also criticized a provision in the bill that would allow the attorney general to pump the brakes on any deal with a sale-leaseback agreement. These allow the owner of a hospital or nursing home to sell a facility’s real estate to a third party. Sellers often end up pocketing the proceeds while saddling the facility with debt or high rent payments. In some cases, the owner may also hold a stake in the third party.
These deals, Shamberg said, are sometimes needed “for both liability and financing reasons.”
“We need to look at the system holistically, figure out and decide where we want to put resources, where we want to put investment, to ensure that … private equity doesn't have to come in in the first place,” Shamberg said.
While lobbyists for private equity interests don't hold much sway in Harrisburg, hospitals and nursing homes are an influential political force.
The nursing home industry spent at least $2.2 million on lobbying in 2024. And during the last legislative session, owners and operators spent $682,000 on campaign donations to top lawmakers. Of those dollars, almost 60% went to top state Senate Republicans.
“We will support those who support us,” Shamberg said, noting other donations to Shapiro and leaders of the other legislative caucuses.
A review of previous studies found private equity had a mixed impact on nursing homes. But “the over-arching consensus suggests that [private equity] ownership introduces pressures that can compromise comprehensive care quality,” the review found, including from sale-leasebacks, which “may reduce transparency and shift resources away from resident care.”
Policymakers, the study argued, should expand disclosure rules to require detailed reporting of ownership layers, financing structures, and management arrangements, particularly for private equity.
“Making this information publicly available and easily interpretable would improve regulatory oversight and enable residents, families, and payers to make more informed decisions,” the study concluded.
State Sen. Frank Farry (R., Bucks), who chairs the committee through which the bill must pass to reach Shapiro, said all four caucuses and the governor are negotiating the bill’s finer details. He also said nursing home and hospital acquisitions might best be addressed in separate bills.
“I’m not dispelling one or the other,” Farry said. “I just think they are an apple and orange, and do they both end up in a bill [together] or not?”