Democrat lawmakers on Thursday re-introduced the Stop Wall Street Looting Act, which they say is meant to fundamentally reform private equity investments, including transactions involving skilled nursing properties and operators.
LeadingAge told the McKnight’s Business Daily on Thursday that “[p]rivate equity goals do not align with LeadingAge quality goals.”
“Broadly, regarding private equity investments in nursing homes and other care settings serving older adults, ensuring quality of care in aging services settings is critical; we support efforts to ensure that older adults and families receive quality care,” a spokesperson said. “Ownership and change of ownership can impact quality of care. Nonprofit providers disclose ownership as required by law, and we support transparency in nursing home ownership.”
“Private equity takeovers are legal looting that make a handful of Wall Street executives very rich while costing thousands of people their jobs, putting valuable companies out of business, and in the case of healthcare, is literally a matter of life and death,” said Sen. Elizabeth Warren (D-MA), of the bill’s co-sponsors. “Our bill is designed to close loopholes and end incentives for private equity pillaging — and it will make sure what happened at Steward [Health Care] never happens again.”
Under the proposed legislation, “every transaction since Steward Health Care was bought by private equity would be subject to review as part of Steward’s bankruptcy to determine whether it can be clawed back as a fraudulent transfer,” according to Warren’s office.
The sponsors of the bill said that private equity fund assets reached almost $8 trillion in 2023, compared with $4.5 trillion in 2020, affecting “nearly every sector of the economy,” including skilled nursing.
According to a letter to Warren from the Center for Economic and Policy Research, the Steward debacle “illustrates how the private equity owner and executives, working with the real estate iInvestment Trust (REIT) that propped it up, were able to enrich themselves while driving the hospital system into bankruptcy — failing the patients, workers and communities that depended on them.”
CEPR alleges that Medical Properties Trust “enabled much of the bad behavior that led to Steward’s demise, because so little is known about REITs by the public and policymakers.”
If passed, according to Warren’s office, the Stop Wall Street Looting Act would require private investment funds to have “skin in the game” and private equity firms, firms’ general partners and their “insiders” would be held accountable for liabilities within their control. The bill, including to its supporters, also would close certain loopholes regarding how much a private equity firm can extract from a company. Further, private equity firms would be required to prioritize workers’ wages during the bankruptcy process, increasing the priority claims for unpaid earnings and other benefits from $10,000 to $20,000 per worker.
Warren’s office also said that the Stop Wall Street Looting Act would increase transparency from private equity firms and essentially drive REITs out of healthcare.
The bill is supported by SEIU, the Massachusetts Nurses Association, the Action Center on Race and the Economy, the AFL-CIO, the American Economic Liberties Project, the American Federation of Teachers, Americans for Financial Reform, the Center for Popular Democracy, the Coalition for Patient-Centered Care, the Communications Workers of America, Community Catalyst, the Economic Policy Institute, Indivisible, the National Employment Law Project, National Nurses United, the National Women’s Law Center, the Private Equity Stakeholder Project, People’s Action, Public Citizen, Strong for All, the Student Borrower Protection Center, Take Medicine Back, Take on Wall Street, UNITE HERE, United for Respect, the Working Families Party and Worth Rises.
“PE [firms] are not in the nursing home space to provide good care. They are in it to turn a profit in five to seven years,” Sam Brooks, director of public policy for The National Consumer Voice for Quality Long-Term said previously. “They exploit the lack of transparency most for-profit operators do, but just to a greater degree.”
Brooks tracks private equity deals in the skilled nursing sector.
Introduction of the bill on Thursday follows the introduction of other legislation at the national level focused on the private equity and REIT funding sometimes used in senior living and care and in other industries. Warren (D-MA) and Sen. Edward Markey (D-MA), another sponsor of the Stop Wall Street Looting Act, introduced the Corporate Crimes Against Health Care Act of 2024 in June, and Markey (D-MA) and Rep. Pramila Jayapal (D-WA) introduced an updated version of the Health Over Wealth Act in July.
