Connecticut has blocked the private equity-driven practice of sale-leasebacks in healthcare—the practice of selling land to an investor who then leases it back—in a first-of-its kind law stemming from the collapses of hospital systems Prospect Medical and Steward Health Care.
The law blocks all hospital leaseback transactions starting July 2027, according to its text, which was signed into law by Connecticut governor Ned Lamont last week. It also requires hospitals to submit an annual statement attesting that private equity cannot directly influence clinical decisions or introduce policies that interfere with clinical decisions or face a $2000 fine, the law says.
The law appears to be the first in the country instituting an all-out ban on hospital sale leasebacks. Massachusetts last year banned main hospital campuses from leasing from real estate investment trusts, leaving the possibility open to satellite campuses, according to the bill.
“This legislation protects Connecticut hospitals from the financial engineering that brought Prospect to bankruptcy and left our communities in danger of losing a key healthcare provider,” said Democratic Senator MD Rahman, who co-sponsored the bill.
While the law is a major milestone in private equity oversight, a more radical bill that would have banned private...
