Health advocates in Vermont believed they were getting out ahead of a problem when they pressed lawmakers this year to adopt some of the strongest regulations in the country against private equity-backed acquisitions in health care.
But private equity has established a much more significant footprint in Vermont than was previously widely known. That’s injected new urgency into the conversation in Montpelier — but also complicated it. And the legislation that advocates have sought could now die in committee as provider groups argue that the bill at hand overshoots its goal and threatens to devastate the state’s fragile health care system.
Sam Peisch, a policy analyst for the Office of the Vermont Health Care Advocate, said he and his colleagues were looking at challenges out of state when they began their work on H.583. He cited Steward Health Care, a private-equity owned hospital chain that went on a debt-fueled buying spree before declaring bankruptcy in 2024.
Private equity firms typically invest in companies and take control of operations in hopes of reselling them within a short time frame. And while the idea is to find efficiencies and improve operations, critics say that what often happens in practice is that the purchased entities are loaded with debt and cut to the bone in the pursuit of the quickest buck.
“That got us thinking, does Vermont have sufficient protections for these types of activities?” Peisch said.
While it was already well established that private equity had made an entrance into Vermont’s nursing home market, most believed that’s generally where it ended. And Peisch said he was as surprised as anyone when a researcher from Brown University told lawmakers last month that over half of the state’s methadone clinics were already affiliated with private equity.
That same researcher, health care economist Yashaswini Singh, also told lawmakers studies she had conducted suggested private equity’s involvement raised prices, reduced quality and increased physician turnover.
The bill crafted by the advocate’s office would require all health care entities to disclose information about who owns them to the state. And it would also prohibit private equity firms from taking control of medical practices or hospitals, and protect physician decision-making from corporate influence.
At least, that’s in theory. A series of provider groups — including the state’s hospitals, medical society and Planned Parenthood — have lined up before lawmakers to argue that the legislation is far too broad and threatens to prohibit standard corporate practices.
“Instead of preventing harmful private equity financial transactions, (the bill) contains blanket prohibitions, fines that exceed operating margins, and a private right of action that each individually threaten the ongoing viability of Vermont’s entire health care system,” a coalition of providers wrote in testimony to lawmakers.
Providers have also argued that Vermont can ill afford to turn down access to capital — and that not all private equity is necessarily bad.
Glenn Goldman, a Vermont dermatologist at Four Seasons Dermatology, told lawmakers his experience had been “exceptional” since the practice he joined had been bought by a private equity-backed group.
Since then, the practice had expanded, Goldman said, and hired top talent. He no longer had to deal with insurance companies, billing or other back-end administrative problems. The net impact was more time spent on patient care.
“A medical company should certainly have a chief medical officer. But the business of medicine should be run by business people. That’s the way it is these days. I don’t want to do it. That leaves the rest of us to practice medicine we see fit,” he told lawmakers.
For now, H.583 is still in the House Health Care Committee, and it faces a post-town meeting week deadline to move on or die on the vine this year.
Providers have put forward their own proposed legislation to safeguard medical decision-making from corporate influence. Advocates have said that language may be a good place to start — but lacks needed transparency and enforcement mechanisms.
“It may well take us more than one year to get to where we need to be,” Vermont Health Care Advocate Mike Fisher said.
