After Steward crisis, state scrutinizes private equity in health care transactions

The Massachusetts Health Policy Commission has begun exercising expanded regulatory authority to scrutinize private equity transactions in healthcare following the Steward Health Care crisis. Since gaining new powers under a 2024 healthcare market oversight law, the HPC has reviewed 15 deals involving significant equity investors, with the majority involving private equity firms. The regulatory expansion targets material changes when significant equity investors pursue partial or complete control of healthcare providers, provider organizations, or contracting medical services organizations with at least $25 million in net patient service revenue.

The Steward collapse, which resulted in the closure of two hospitals, provided the catalyst for legislative action. That crisis exposed vulnerabilities in healthcare governance structures and prompted policymakers to establish oversight mechanisms specifically designed to evaluate how major equity investment impacts broader healthcare market dynamics. HPC Director David Seltz told the HPC board in July that "significant emerging evidence" demonstrates a relationship between private equity investment in healthcare and measurable impacts on affordability, cost, quality, patient safety, workforce stability, and market competitiveness.

Historical data supports regulatory concern. An HPC analysis of healthcare provider mergers and acquisitions in Massachusetts spanning 2013-2023 found that private equity firms were involved in 47% of all healthcare provider transactions (85 of 182 deals), indicating sustained and substantial PE participation in healthcare consolidation. This pattern continues at the national level: Bain & Company's 2025 report documented that global healthcare private equity reached a record $191 billion in deal value with 445 announced buyouts, representing the second-highest transaction volume on record. The continued capital deployment suggests private equity remains a dominant consolidation force in healthcare despite heightened regulatory scrutiny and reputational concerns tied to high-profile failures.

The new HPC authority requires healthcare providers and organizations meeting the revenue threshold to file transaction notices, enabling regulators to assess systemic effects before deals close. This represents a meaningful shift in governance structure, moving from post-transaction review to prospective analysis of material transactions.