By Stacey Pogue and Kennah Watts

Massachusetts has demonstrated a long-standing commitment to increasing transparency in its health care system, constraining health care cost growth, and fostering access to high-quality, affordable care. Last year, Massachusetts was at the epicenter of Steward Health Care’s collapse that stemmed, in part, from destabilizing private-equity tactics. The crisis provided a stress test for the state’s programs to monitor its health care system. In January of 2025, Massachusetts enacted a law that aims to address the blind spots exposed by Steward’s collapse and better equip the state to pursue its health care access and cost containment goals within a period of growing health care corporatization and private equity control of health care entities.

In recent years, private equity investment has significantly increased in the health care sector. This growth, coupled with evidence of quality, access, and cost concerns following private equity acquisitions, has spurred scrutiny by policymakers, including a recent bipartisan investigation and report from the U.S. Senate Budget Committee. Policymakers in several states have considered approaches to overseeing private equity in health care in recent years, though bills have only made it across the finish line in a handful of states. Massachusetts’ approach may serve as a model for other states seeking to enhance transparency and oversight of their health care system in this rapidly changing landscape.  

Massachusetts Responded to Significant Patient, Worker, and Community Harms from Private Equity Practices

Massachusetts’ legislative action and increased oversight of private equity come in the wake of the bankruptcy of a major health system with private-equity ties, Steward Health Care. In the fallout from Steward’s collapse, two hospitals in the state closed, the state took on hundreds of millions of dollars in expenses to keep other struggling hospitals open, thousands of workers lost their jobs, and patient access plummeted.    

Steward, which originally operated an 11-hospital system in Massachusetts under the ownership of private equity firm Cerberus Capital Management, exploited profit-driven tactics to expand the health system’s reach. Over the course of a decade, Steward partnered with Medical Properties Trust, a real estate investment trust (REIT), to finance hospital purchases across the country, with lease back and mortgage payment deals instated at the newly Steward-owned hospitals. These deals were unsustainable, as the facilities lost their land and facility assets while paying increasingly unaffordable rent. While Medical Properties Trust helped Steward become the largest for-profit private hospital chain in the US, this expansion was fueled by massive debt accumulation. Meanwhile, Cerberus Capital Management collected millions in dividends. In 2020, as Steward’s debt continued to climb and pandemic concerns rose, Medical Properties Trust financed a sale of Steward to the system’s doctors, and Cerberus exited the arrangement with over $800 million in profits from their decade of ownership. The sale did little to improve Steward’s financial situation. Stripped of its assets and loaded with debt, the health system struggled to pay rent, stopped payments to vendors, closed emergency departments, reduced staff, minimized medical equipment purchases, and more. In early 2024, Medical Properties Trust claimed Steward owed months of rent, and shortly thereafter, the health system filed for bankruptcy. At the time, Steward operated 33 hospitals across ten states, but Massachusetts, with eight Steward-owned hospitals, was particularly hard-hit by financial shortcomings and mismanagement. 

New Massachusetts Law Increases Transparency and Oversight of Private Equity in Health Care

On January 8th, 2025, Governor Maura Healey signed into law House Bill 5159, An Act Enhancing the Market Review Process. The law is designed to close loopholes that effectively exempted many private entities–like private equity, REITs, and management services organizations (MSOs)–and their health care-related transactions from the state’s long-standing infrastructure to monitor and improve its health care system. The law expands annual provider financial and ownership reporting requirements to include new information related to private equity, REITs, and MSOs, and increases the penalties for failing to report information from $1,000 per week to $25,000 per week. In addition, hospitals that fail to report required information will not be able to renew their state license to operate.

The law also subjects private equity firms, REITs, MSOs, and certain associated transactions to the states’ existing oversight processes. For example, these entities will be required to participate in the state’s annual Health Care Cost Trends Hearing that examines the drivers of increasing health care costs. In addition, specific transactions – such as private equity taking ownership or control of a provider group and a significant transfer of assets, including the sale and subsequent lease-back of a health care provider’s real estate – were added to the state’s list of changes that require 60-days advance notice and trigger state review of their expected impact on health care costs, quality, and access. Moving forward, the law also prohibits the main campus of a hospital from leasing from a REIT, though arrangements in existence prior to April 2024 are grandfathered. 

Other Provisions in the New Law

In addition to updates focused on private equity, the new law takes several steps to enhance access to high-quality care while also constraining the drivers of health care costs. It directs the state Department of Insurance to consider affordability for consumers and employers when reviewing health insurance rates, increasing the Department’s authority to conduct “enhanced” rate review. The law also bolsters the state’s health care resource planning in several ways. First, the law creates a new task force to study and make recommendations for improving primary care access, delivery, and payments. Second, the law charges a new Office of Health Resources Planning with developing a statewide Health Resource Plan. The plan will forecast needs for health care services and facilities, catalog existing resources, and make recommendations to improve the supply and distribution of health care facilities and workforce over a five-year planning period. The initial plan is due by January 1, 2027. Finally, the law ensures the state’s Determination of Need process, which evaluates whether the expansion of a health care facility aligns with the state’s goals for access and cost containment, is informed by the new Health Resource Plan and input from state agencies that collect provider financial data, review health care transactions, and monitor health care cost drivers. 

Looking Ahead

Private equity practices that prioritize short-term profits are often at odds with the goals of long-term health care system stability, quality care, and patient access, creating the need for checks and balances. As Steward illustrates, these practices can harm patients and taxpayers as shareholders pocket millions of dollars in dividends. Massachusetts’ swift state action is designed to prevent future catastrophes of this nature. 

As private investment in health care markets grows, other states may consider similar action to mitigate negative outcomes and protect patients through increased oversight and regulation of  private investors. This may be especially true in light of the bankruptcy of the private equity-backed health system Prospect Medical Holdings, which operates in  California, Rhode Island, Connecticut, and Pennsylvania. These states may have greater incentives to place additional regulation on private equity and other investors. States that are interested in greater oversight of private equity may consider other states’ approaches or look to model legislation from the National Academy for State Health Policy (NASHP). Massachusetts now offers one additional model of a state response to private investment, and other states could experiment within their own regulatory and market contexts to best protect consumers from the risks associated with increased corporatization and private equity investment.