Health care deals under ownership review

Summary#

LD 2190, “An Act to Implement Certain Changes in the Certificate of Need Laws Recommended by the Commission to Evaluate the Scope of Regulatory Review and Oversight over Health Care Transactions That Impact the Delivery of Health Care Services in the State,” would amend Maine’s certificate-of-need laws in Title 22. Its stated goal is to carry out a commission recommendation; it failed and is not law.

  • It would add a change in a health care facility’s ownership structure or operational control involving a private equity company or real estate investment trust to the events covered by the certificate-of-need law.
  • It would add a review criterion: a project must not negatively affect the affordability and accessibility of health care for Maine residents.
  • For a facility ownership or control transfer, Department of Health and Human Services (DHHS) staff would have to analyze the ownership structure and its impact on the applicant’s ability to meet specified approval conditions.
  • DHHS would have to hire a consultant, paid for by the applicant, to investigate the prior activities and conduct of any private equity company or real estate investment trust associated with the project. DHHS could also consult the Attorney General.
  • The bill defines “private equity company” broadly as an entity, publicly traded or not, that collects capital investments from people or entities. It uses the federal tax code’s definition of “real estate investment trust.”

What it means for you#

  • Health care facilities and transaction applicants: If the bill had become law, a qualifying ownership or control change would be covered by the certificate-of-need law. The text does not ban these transactions or say they would automatically be rejected.
  • Private equity companies and real estate investment trusts: Their involvement in a covered facility transaction would be examined. The bill does not prohibit their ownership.
  • Maine residents: Affordability and accessibility would be part of the project approval criteria. The bill does not define those terms or promise a particular change in prices or access.
  • Other parts of the review: The bill also edits existing review criteria and assessment requirements. The current statute was not supplied, so it is not possible to verify which of those edits would change current practice.

Money#

The bill requires an applicant to fund the consultant’s review, but gives no estimate of that cost. No publicly available information.

  • DHHS would have to contract with a consultant; the bill does not state the contract amount.
  • The bill gives no estimate of DHHS staffing or other public costs.

What is unclear#

  • The bill does not set standards for judging whether a project harms affordability or accessibility.
  • It does not specify how the consultant would investigate, how long the review would take, or how its findings would be used.
  • The bill does not explain how the ownership review would interact with other reviews or approval processes.
  • The supplied text does not include the current version of Title 22. The explanatory summary also refers to broader authority for later reviews, but the supplied operative text does not clearly show that change.
  • The bill does not provide a start date. It failed, so it did not take effect.

Case for#

  • A possible argument for the bill is that facility ownership can matter to whether an applicant can meet the law’s approval conditions. Examining the ownership structure and prior conduct could give DHHS more information when reviewing a transaction.
  • Adding affordability and accessibility as an approval criterion could make those effects an explicit part of the decision.
  • Requiring the applicant to fund the consultant would place that review cost on the party seeking approval, rather than specifying a new public funding source.

Case against#

  • One concern is that the bill requires an applicant-funded investigation but does not set limits on its scope, timing, or cost.
  • The bill does not define how to measure a negative effect on affordability or accessibility, which could leave important approval judgments uncertain.
  • The definition of private equity company covers any entity that collects capital investments, whether publicly traded or not. The bill does not explain how that definition would apply to different ownership structures.