Nationalize Healthcare Delivery

About 1,224 of the 5,121 U.S. community hospitals — 23.9 percent — were investor-owned for-profit facilities in 2024, according to the American Hospital Association’s Fast Facts on U.S. Hospitals, 2026. Private equity has invested approximately $1 trillion in the U.S. healthcare sector over the prior decade. A 2023 study in JAMA examining 51 private-equity-acquired hospitals found a 25.4 percent increase in hospital-acquired conditions, including a 27.3 percent increase in falls and a 37.7 percent increase in central-line-associated bloodstream infections. A federal statute would prohibit investor-owned for-profit ownership of hospitals, clinics, dialysis centers, nursing homes, and physician practices, and would direct federal capital toward expansion of public and non-profit healthcare delivery.

What for-profit healthcare delivery does

The U.S. hospital sector in 2024 included 5,121 community hospitals, of which 2,984 (58.3 percent) were non-government non-profit, 1,224 (23.9 percent) were investor-owned for-profit, and 913 (17.8 percent) were state and local government. The investor-owned segment is concentrated in hospital systems traded on public markets, including HCA Healthcare, Tenet Healthcare, Community Health Systems, and Universal Health Services, and in privately held private-equity portfolio companies. The Private Equity Stakeholder Project documented in 2024 that 8 percent of all private U.S. hospitals — and 20 percent of all for-profit U.S. hospitals — are private-equity-owned.

Investor-owned and private-equity-owned healthcare delivery operates under fiduciary obligations to shareholders. Capital, staffing, and asset decisions are subject to those obligations and to the financial structures common in private-equity portfolio companies, including leveraged buyouts, dividend recapitalizations, sale-leaseback transactions with real estate investment trusts, and management-fee extraction. As of November 2023, 93 percent of the most distressed healthcare companies in the United States were private-equity-backed. One-fifth of healthcare companies that declared bankruptcy in 2023 were private-equity-owned.

Steward Health Care, a multistate hospital system owned by private equity firm Cerberus Capital Management from 2010 through 2020, filed for Chapter 11 bankruptcy on May 6, 2024, with over $9 billion in liabilities. According to “The Pillaging of Steward Health Care,” published by the Private Equity Stakeholder Project, Cerberus extracted approximately $800 million during its ownership through dividend recapitalizations, sale-leaseback transactions with Medical Properties Trust, management fees, and related-party transactions. Senator Edward J. Markey’s report, “The Steward Health Care Report: How Corporate Greed Hurt Patients, Health Workers, and Communities,” released September 2024, documented eight hospital closures across four states from 2014 through 2024, the loss of approximately 1,533 patient beds and 4,431 healthcare jobs, and at least one maternal death at a Steward facility resulting from medical equipment that had been repossessed for unpaid bills.

The 2023 JAMA study by Kannan, Bruch, and Song compared 662,095 hospitalizations at 51 private-equity-acquired hospitals to 4,160,720 hospitalizations at 259 matched control hospitals over fiscal years 2009 through 2019. The analysis found a 25.4 percent increase in hospital-acquired conditions at private-equity-acquired hospitals, including a 27.3 percent increase in falls and trauma incidents and a 37.7 percent increase in central-line-associated bloodstream infections. Central line placements declined 16.2 percent at the same hospitals during the post-acquisition period, indicating that the increase in bloodstream infections occurred despite a smaller exposed population.

The statute and appropriation

A federal statute is required because the existing Conditions of Participation at 42 C.F.R. Parts 482 and 485 do not restrict ownership type for hospitals or other Medicare and Medicaid participating providers. Two existing legislative vehicles address parts of the issue. The Health Over Wealth Act, introduced July 25, 2024, by Senator Edward J. Markey and Representative Pramila Jayapal, sets transparency, escrow, and licensing requirements for private-equity-owned healthcare entities. The Corporate Crimes Against Health Care Act of 2024 (S. 4503), introduced June 11, 2024, by Senators Elizabeth Warren and Edward J. Markey, establishes criminal penalties of up to six years’ imprisonment for executives whose extraction of assets from healthcare entities results in patient death, with civil clawback authority for state attorneys general and the Department of Justice and the elimination of selected REIT tax provisions for healthcare assets. A consolidated statute combining these vehicles with a prohibition on investor ownership and a federal capital appropriation, if enacted with the following provisions, would establish public and non-profit operation as the structure of U.S. healthcare delivery:

• Prohibit investor-owned for-profit ownership and operation of hospitals, ambulatory surgical centers, dialysis centers, nursing homes, hospice providers, and physician practices participating in Medicare or Medicaid.
• Require existing for-profit healthcare delivery entities to convert to non-profit, public, or cooperative ownership within seven years of enactment, or to divest to qualifying non-profit, public, or cooperative operators.
• Prohibit private equity acquisition of patient-facing healthcare providers, prohibit sale-leaseback and dividend-recapitalization transactions involving healthcare delivery entities receiving Medicare or Medicaid payment, and prohibit real estate investment trust ownership of hospital and clinic facilities.
• Authorize federal capital appropriations for federal acquisition of converting facilities, expansion of the Veterans Health Administration and the Indian Health Service, and capital grants to non-profit and public operators acquiring divested facilities.
• Establish federal criminal penalties of up to six years’ imprisonment for executives of healthcare delivery entities whose financial management results in patient death, consistent with the Corporate Crimes Against Health Care Act.
• Federalize or otherwise transfer the staff of acquired facilities into federal employment or non-profit collective bargaining frameworks, with continuity of accrued benefits.

The companion appropriation funds the federal acquisition program, expansion of the Veterans Health Administration and the Indian Health Service, and capital grants to non-profit and public hospital systems acquiring divested facilities.

Precedent

Federal precedent for direct public operation of healthcare delivery exists in current law. The Veterans Health Administration is the largest integrated healthcare system in the United States, operating 170 medical centers and 1,193 outpatient sites of care for 9.1 million enrolled veterans, with 371,000 healthcare professionals and an annual budget of approximately $68 billion. The Indian Health Service operates 26 hospitals, 59 health centers, and 32 health stations in 37 states, providing direct care to approximately 2.2 million American Indians and Alaska Natives. The Health Resources and Services Administration funds 1,400 community health centers operating more than 16,200 service sites in all U.S. states and territories, serving 32 million people through approximately 139 million visits in 2024.

Federal precedent for capitalizing public and non-profit healthcare delivery exists in the Hospital Survey and Construction Act of 1946, commonly referred to as the Hill-Burton Act. The Act provided federal grants to states for the construction of community hospitals operated on a non-profit basis, conditioned on a community service obligation that required participating facilities to provide a defined volume of uncompensated care. By 1975, Hill-Burton had financed approximately one-third of all U.S. hospitals. The program was rolled into Title VI of the Public Health Service Act in 1975.

State and municipal precedent exists in NYC Health + Hospitals, the largest municipal healthcare system in the United States. NYC Health + Hospitals operates 11 acute-care hospitals and more than 70 patient-care locations, with 45,000 staff serving more than one million patients per year, of whom approximately 400,000 are uninsured.

International precedent: The United Kingdom’s National Health Service Act 1946 (9 & 10 Geo. 6 c. 81) received Royal Assent on November 6, 1946, and the National Health Service began operations on July 5, 1948, providing comprehensive medical services free at the point of use, financed through general taxation, and delivered primarily through publicly owned hospitals staffed by publicly employed clinicians. Italy enacted Servizio Sanitario Nazionale through Law 833 of 1978 and Spain enacted Sistema Nacional de Salud through the General Health Act of 1986, both establishing predominantly publicly delivered universal systems.

First 100 days

The statute and the companion appropriation must be enacted by Congress for the steps below to take effect. The schedule presumes a coordinated executive-legislative effort with floor consideration in the first month and final passage by day ninety.

Day one. The administration transmits the statute and the companion appropriation to Congress and requests immediate consideration. The Department of Health and Human Services issues a moratorium on Medicare and Medicaid Conditions of Participation approvals for new investor-owned facility enrollments. The Centers for Medicare & Medicaid Services begins publication of an inventory of every investor-owned facility participating in Medicare or Medicaid, including ownership chain, financial structure, and any pending real-estate-investment-trust or sale-leaseback transactions.

Day thirty. Both chambers complete committee markup and floor consideration of the statute and the companion appropriation. HHS publishes the proposed conversion timeline, the framework for federal acquisition of converting facilities, the criteria for capital grants to non-profit and public acquirers, and the rules implementing the criminal-penalty provisions. The Veterans Health Administration and the Indian Health Service publish expansion plans contingent on the appropriation.

Day ninety. Congress passes the statute and the companion appropriation, and the President signs both into law. CMS opens the conversion-tracking and acquisition-authorization processes. The Department of Justice opens the office responsible for clawback enforcement and criminal-penalty referral.

Effect of the prohibition

A federal prohibition on investor-owned for-profit ownership of healthcare delivery removes shareholder return as a determinant of operating decisions at patient-facing providers. Hospitals, clinics, dialysis centers, nursing homes, and physician practices operate under public, non-profit, or cooperative ownership. Private-equity acquisition, sale-leaseback transactions, dividend recapitalizations, and real estate investment trust ownership of healthcare assets are prohibited under the statute. Federal capital expansion places additional capacity within the Veterans Health Administration, the Indian Health Service, and federally supported public and non-profit hospital systems. Provider payment continues through existing Medicare, Medicaid, and private-insurance pathways during transition, and through the single-payer program where enacted.