PA House passes legislation to stop proliferation of ‘health deserts’ across PA

House Bill 2344 would give the Office of the Attorney General powers to stop health system consolidations that lead to facility closures

Rep. Takac & Rep. Borowski    July 11, 2024 | 4:04 PM

HARRISBURG, July 11 -- The state House passed legislation today authored by state Reps. Lisa Borowski and Paul Takac that would protect communities from losing access to vital health care services due to health system consolidations and closures, by providing the state attorney general with tools to shield Pennsylvanians from corporate mergers that would devastate the availability of health services and increase patient costs.

House Bill 2344 would amend the Health Care Facilities Act to provide needed oversight from the Office of the Attorney General when for-profit and non-profit hospitals change hands or undertake major corporate or financial restructuring. Right now, the office’s ability to review these sales is limited.

“This is about the due diligence we owe to the people who call this commonwealth home. Health system mergers literally put their lives at stake when they result in Pennsylvanians no longer being within reach of a hospital or specialized care – like maternity wards – without hours of travel,” Borowski said. “I spent more than 30 years working in health care and saw how community hospitals are not only essential for health and wellness, but for social and economic stability, as well. The fact that 14 out of the last 15 hospital closures in Pennsylvania over the past five years occurred following a merger or acquisition shows us this legislation is necessary to keep up with the new realities of the health care industry.”

“This legislation will help ensure continued access to essential and life-saving health care,” Takac said. “Far too many Pennsylvanians face the prospect of losing access to their personal doctors and local hospitals, simply due to profit-driven decisions made by large health care systems. Consolidation and the closure of local facilities can be devastating to people and communities. This provides an important tool to review those decisions and ensure that they do not benefit stockholders at the expense of patients and families.”

The bill would require health systems to file notice and documentation to the state attorney general before completing a sale, and would allow the attorney general to:

  • Seek legally binding agreements from merging health systems to preserve health services, rather than the unenforceable promises that typically are announced with mergers.
  • Block leveraged buyouts and other Wall Street financial tricks to raid hospitals of their assets and leave them with massive debt.
  • Challenge large shareholder dividend payments to hospital owners when such payments threaten the financial viability of a health system.
  • Vet the finances of an acquiring entity to ensure it has the financial strength to run a successful health system in the long run.

The bill also stipulates that a minimum of 90 days must elapse from the health system’s notification to the attorney general before the transaction can be completed (the attorney general can seek extensions if needed documents are not furnished), and that the attorney general must conduct at least one public hearing on the proposed transaction. If the attorney general feels a proposal is against the public interest, they may seek a court injunction.

According to Borowski and Takac, their bill is substantially similar to S.B. 548 (in the state Senate Health & Human Services Committee after being introduced in May) but would include all hospital systems, while the Senate bill only addresses for-profit health systems.

Borowski and the primary sponsor of S.B. 548, Sen. Tim Kearney, represent parts of Delaware County, which Borowski said serves as an example of what happens when mergers and acquisitions proceed without state oversight. Crozer Health System closed two of its four hospitals in the county following the sale and leaseback of its real estate in 2016 and paid out $425 million to its private equity owners from the sale proceeds.

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