PA Senate Institutional Sustainability and Innovation — 2026-06-24

Good morning. I call this meeting of the Senate Institutional Sustainability Innovation Committee to order. Dustin, please call the roll.

Collette? Here.

Haywood? Here.

Robinson?

Santero? Here.

I'd like to call up House Bill 1460, sponsored by Representative Borowski. This bill establishes a freestanding act to authorize the Attorney General to review acquisition transactions when for-profit entities seek to acquire certain health care entities. Is there a motion to consider the bill?

Seconded by Senator Robinson.

Good morning. Thank you very much, Chairman Ferry, Chairman Carney, and members of the Senate Institutional Sustainability and Innovation Committee. I thank you for the opportunity to speak on House Bill 1460, the Health System Protection Act. On May 2, 2025, Crozer Chester Medical Center and Taylor Hospital in Delaware County ceased operations. In addition to leaving a county of over half a million people with only two acute care hospitals available to care for their needs, over 2,600 nurses, physicians, food service, environmental staff, technicians, therapists, administrative staff, and EMS professionals lost their jobs. The damage left in the wake of Prospect Medical Holdings, a private equity group from California, and their disastrous foray into health care in the Commonwealth of Pennsylvania endangered the lives of nearly half a million children and adults while generating personal wealth for a handful of executives and shareholders. Their actions hurt communities and took advantage of Pennsylvania taxpayers who helped keep the system afloat while the shareholders and owners watched and counted their bounty from afar. Sadly, Delaware County is not alone in experiencing the devastation brought by a health system closure. In the past five years, our Commonwealth has lost 26 nonprofit and for-profit hospitals. Forty-six have changed owners. As hospitals struggle to cover costs in the face of stressors like low reimbursement rates, coupled with the growing cost of doing business, increasingly they seek buyers for financial relief, access to capital, and operational support. But many times the tradeoff is lower quality patient care and the loss of long-term stability. The Health System Protection Act is the result of a fully collaborative process with many stakeholders, all moving toward the one goal we all agreed on, protecting health care access in Pennsylvania. While House Bill 1460 is not the answer to all the issues our health care systems face, it is a first step toward addressing the issue of for-profit and private equity transactions in health care facilities. Most notably, it provides our Attorney General with the tools needed to review transactions prior to being finalized and provides for ongoing monitoring to ensure that these transactions are not against the public interest. It will allow our Attorney General to evaluate these transactions to ensure there is no unfair competition, a reduction in quality of care, reduction in access or availability to services, minimize the impact on our already struggling rural, low-income, and disadvantaged communities, and most importantly, provide a process to evaluate potentially damaging health care leaseback agreements, the ultimate blow which led to the demise of so many health facilities in our Commonwealth, like Crozier Health and Hahnemann. It will also allow impacted communities to have a say in the process. In short, House Bill 1460 would strengthen Pennsylvania's ability to protect health care services, ensure community access to hospitals, and limit the negative impact of private equity transactions on public health. It represents a significant step toward regulatory oversight of health care consolidation and financial transactions in our Commonwealth. wealth. I'm grateful to the Senate's Institutional Sustainability and Innovation Committee staff, that is a mouthful, that committee, the administration, and the bipartisan staff of the House Health Committee for their work to help bring us closer to realizing significant protection for our hospitals. I am optimistic we can act together to prevent the narrowing of the legislation, and from allowing another health system to fall prey to bad actors who see the residents of our Commonwealth not as people to be cared for, but as profits to be made. Thank you all so much for your consideration of House Bill 1460.

Motion by Senator Brooks, seconded by Senator Gephardt.

The summary of substantive changes, the material amount threshold was increased from $10 million to $25 million, and that will be adjusted annually for the CPI starting in 2028. It insures covered entities, including for-profit entities, other investor groups, private equity and hedge funds, or their affiliates are included. A health care entity is limited to hospitals and hospices. As Senator Ferry said the transactions include asset transfers leasebacks changes of control capital distribution other structural changes but excludes other transactions subcontracts intellectual property or other operations that are not involved in direct patient care but may be part of other day operations. Including from the underlying bill, covered entities must submit extensive documentation to the Attorney General before entering into a transaction and undergo a 60-day review, extendable by 30 days if necessary. These documents are similar to those already required by the Attorney General for other transactions. It adds requirements for notification of any closures of the covered entity has been party to in the last three years, any leaseback or other agreements which may be part of the planned transaction, and in addition a copy of a filing with the Federal Trade Commission as part of the Hart-Scott-Rodino Act. The amendment expands stakeholder input at the public hearings in the affected communities to include patients, providers, and caregivers. If the Attorney General believes the transaction is against public interest, it can enjoin the transaction or have the covered entity enter into an assurance of voluntary compliance, which would include multi-year monitoring up to five years. The covered entity, not the health care entity, must pay for all of the costs required for review, monitoring, consultants, and enforcement. The funds may be placed in escrow with limited opportunities for hardship-based waivers granted by the courts. All materials submitted are subjected to strict confidentiality, exempt from the right to know Act, subpoenas, and civil discovery. State agencies receiving such information are also barred about testifying about it in private litigation. The Act preserves existing antitrust authority by the Attorney General and licensing authority of the Department of Health. It does not prevent federal or state agencies from participating in any enforcement actions. It also requires a report by the Legislative Budget and Finance Committee on the effects of private equity in health care, which must be completed within three years. It also moves the effective date from 90 days to 190 days after the enactment.

Thank you, Mr. Chairman. And thank you for offering this amendment. This amendment reflects changes that were negotiated between the four caucuses, the governor's office, and the attorney general's office over a series of meetings that started in June of 2025. Additionally, this amendment reflects a number of substantive changes to that negotiated product that we were not aware of until late last night. And some of the changes to this amendment we find problematic and would directly exempt the kind of corporate financial transactions that we saw infect and destroy Crozier over the last seven years. It's important that such corporate raiding tactics are addressed in the bill. I will be voting yes to move this forward in this committee because of how hard we've all worked on it, and I appreciate the work that was done by everybody, but I expect that we're going to need a roll call vote because I expect the people on my side will not be supportive of the amendment. It's important to move this bill forward as we move towards the budget, and I will vote to move the bill as amended. I thank the chairman for getting the ball rolling again, and I look forward to further discussions, hopefully today, around how to address some of the issues that we're seeing. I'm encouraged that discussions on further fixes are and will be in order. Thank you.

Thank you, Mr. Chairman. Mr. Chairman, let me start by thanking both Senator Carney and Representative Borowski for their leadership on this issue, particularly in the wake of what happened at Crozier and Hanneman. I remember participating in a policy committee hearing in Delaware County to talk about this issue last year, and they have been steadfast in their dedication to addressing it. So I thank them for that. And that advocacy, I think, helped galvanize broad bipartisan agreement that this issue of private equity in our health care system needs to be addressed. just as Representative Borowski discussed in her opening comments this morning. And that in turn I think led to the four caucus negotiations that Senator Carney talked about earlier. what I am a bit dismayed over is the fact that in addition to the changes that the four caucuses with the Attorney General's office had previously agreed to and with the administration as well I might add there are a number of problematic changes in this amendment and as Senator Carney noted we were only given this amendment last night with relatively little time to digest all of it. And I guess I'm kind of baffled to understand why it is that these things are in the bill, or in the amendment, I should say, and how that came about. For example, removing real estate investment trusts from being included as covered entities, which effectively exempts their transactions with hospitals. That seems to be problematic. Exceptions to cover transactions including mortgages and secured loans, clinical affiliations related to intellectual property agreements, graduate medical education or clinical trials, and contracts or leases concerning day-to-day business operations. I just I guess my question for you Mr. Chairman is how did those changes come about and why were they inserted into this omnibus amendment at the last minute Sure

Well I'd like to hear your answer then I might have a response.

Yep, yep.

Okay, well, thank you for that. At first, with respect to the rates, there's a question as to whether or not, in fact, it's still covered. But I will say with respect to what you just described, there was a process. There was a process with the four caucuses, with the Attorney General's Office, with the administration. I understand getting feedback from stakeholders, whoever those stakeholders might be in this situation. But what I don't understand is why that feedback would then not be discussed in those continuing discussions with the four caucuses, the Attorney General's Office, and the administration as opposed to just being proposed in an amendment. And I do appreciate the point of moving things forward, especially this time of year. I understand that. But it seems to me the more productive way of doing that would have been to take that feedback from the stakeholders, have those discussions that had already been occurring in that forum, and then synthesize those things from which there could be a broad agreement so that when this committee ultimately decided an amendment, it would be an amendment that had, in fact, gone through that process and that everyone was comfortable with moving forward. But that's not what happened here, and it's curious to me that that is the case. So I will, as Senator Carney alluded to earlier, I'll be voting no on this amendment, and if it goes into the bill, the bill is amended. But I am interested, obviously, in seeing this topic and this issue and this legislation ultimately being passed by the General Assembly, just not in the form that it would take with this amendment without that further input.

Okay, if I may, Mr. Chairman, I don't want to belabor the point. And I certainly agree, and you're right, that it is often the legislative process that we pass bills out of committee that are not in the final form or what will ultimately be agreed to. There's no question about that. My only point is where you have a history, particularly on this issue, where you've had the four caucuses, the Attorney General's Office, and the administration engaged in active negotiations, that frankly resulted in the bulk of what's in this amendment. It's odd to me that that would not be the form in which these would be considered and drafted and then ultimately get to the committee. I'm not going to belabor the point. Thank you.

Marble. Aye. Aye. The left. No. Declore. Aye. Haywood. No. Robinson. Aye. No. Ward Judy. Aye. Ward Kim. Hardy. Aye. I'm sorry, Ward Kim proxy yes. Hardy. Aye. Aye.

Senator Brooks. Thank you, Mr. Chairman. This is most certainly a challenging issue, and I want to thank the representative for your comments. What you described has most certainly impacted the families in my legislative district as well. We had a hospital closed, and for one of the first hospitals in the state to ever reopen after that situation occurred, that hospital continues to serve the people in my district, but it also continues to struggle because it's most certainly difficult to reopen a hospital financially and get through all the regulations as well. It is my hope that not only with this piece of legislation and other pieces of reforms that are desperately needed on behalf of our hospitals and our doctors, that we continue down this path. I think there is some hope when I look at Secretary Kennedy's comments on the federal level with the Rural Health Transformation Fund with $193 million coming into Pennsylvania, that that is directed to many of our rural hospitals, especially those struggling. As Secretary Kennedy said, that that money could be the lifeline to some of these hospitals. So I think there's hope, but we also need to continue to have reforms here in Harrisburg legislatively to help these hospitals, reimbursements, regulatory reform, and most certainly this legislation. So thank you for your comments, and thank you, Mr. Chairman.

Thank you, Mr. Chairman. On behalf of the entire Delaware County Legislative, whatever we are, delegation, thank you for calling up House Bill 1460 for consideration. This bill represents the lessons learned by the private equity plundering of both the Sharon Regional Medical Center and Senator Brooks District, which, thank God, that hospital opened again so quickly. We were not able to do that in Delaware County. but the four hospitals of the Crozier system in my district and Senator Kane's district, which has caused chaos, bottlenecks, capacity issues, and just a general lack of health care for the residents of Delaware County. When I first proposed this legislation back in 2022, Crozier had already closed two hospitals and was raising towards bankruptcy. Interested buyers of Crozier pulled out of their prospective sales process because once they looked under the hood, they saw buildings whose owners had neglected basic maintenance, whose land had been sold to and leased back at inflated rates to a real estate investment trust, and who possessed crushing levels of debt following the private equity shareholder dividend totaling some $427 million. dollars. Private equity funds extract value from their portfolio of companies in various ways. They help to grow revenue and profits. They can monetize assets like real estate. They delay needed capital investments. They squeeze vendors and suppliers to improve cash positions. And they can buy their competitors one by one until they have significant market power for certain services and that are controlling prices for all those services. I want to be clear, not all private equity companies act like this. And corporate mergers, complex financial transactions are not necessarily bad and can necessarily be even when they do have negative effects. But when it comes to our health care systems, we've had front row seats as to how the Wall profits were prioritized over patients, nurses, and sustainability of health care access in our communities. The health care system is truly a network, and if one weak link fails, it can have dire consequences for the surrounding health care providers who have to take up the slack. We need this legislation to keep our health care systems protected from bad actors. We need this legislation to ensure sustainable health care access. I could go on for a very long time, but I'll save the rest of my remarks for the floor. Thank you again, Mr. Chairman.

Hargold, aye. Brooks, aye. Collette, no. Jeff Lark, aye. Haywood, aye. Robinson, aye. Tannisero, no. Ward Judy, aye. Ward Pitt, Proxy, aye. Cardi, aye. Barry, aye.