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OLR Bill Analysis
sSB 1507
AN ACT PROHIBITING PRIVATE EQUITY OWNERSHIP AND
CONTROL OF HOSPITALS AND HEALTH SYSTEMS AND THE
CONTROLLING OF OR INTERFERENCE WITH THE
PROFESSIONAL JUDGMENT AND CLINICAL DECISIONS OF
CERTAIN HEALTH CARE PROVIDERS AND REQUIRING AN
EVALUATION OF THE APPOINTMENT OF A RECEIVER TO
MANAGE HOSPITALS IN FINANCIAL DISTRESS.
SUMMARY
Starting October 1, 2025, this bill prohibits private equity companies
and real estate investment trusts (REITs) from acquiring or increasing
any (1) direct or indirect ownership interest in or (2) operational or
financial control over a hospital or health system (i.e. hospitals or parent
corporations of hospitals and their affiliates).
The bill also prohibits (1) health care facilities or entities licensed by
the departments of public health (DPH) or mental health and addiction
services (DMHAS) and (2) management services organizations (MSOs)
from directly or indirectly interfering with or otherwise directing the
professional judgment or clinical decisions of health care practices or
clinicians with independent practice authority at these facilities or
entities or at health care practices. Prohibited conduct includes, among
other things, controlling the amount of time spent with patients,
decisions on patients’ clinical status, or diagnostic codes used.
Starting July 1, 2025, the bill makes null and void any (1)
nondisclosure or non-disparagement agreements regarding this
prohibited conduct to which a clinician with independent practice
authority is a party and (2) policies or contracts that violate the bill’s
provisions.
It authorizes DPH to adopt regulations to implement the bill’s
provisions. 2025SB-01507-R000614-BA.DOCX
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Lastly, the bill requires the Office of Health Strategy (OHS) to
evaluate whether the attorney general should be allowed to petition the
Superior Court to appoint a receiver to manage hospitals in financial
distress or operational crisis. The OHS commissioner must report on the
evaluation to the Public Health Committee by October 1, 2026.
EFFECTIVE DATE: July 1, 2025, except the provision on the OHS
evaluation and reporting requirement takes effect upon passage.
PRIVATE EQUITY COMPA NY AND REIT ACQUISITIONS
Starting October 1, 2025, the bill prohibits private equity companies
and REITs from acquiring or increasing any (1) direct or indirect
ownership interest in or (2) operational or financial control over a
hospital or health system.
Under the bill, a “private equity company” is a publicly or privately
traded entity that collects capital investments, and a “REIT” generally is
a company that owns or finances income-producing commercial real
estate.
The bill defines an “ownership interest” as having equity in a
hospital’s or health system’s capital, stock, or profits or owning the real
estate where these facilities operate. It defines “operational control” as
(1) influencing or directing the actions or policies of any part of a
hospital or health system or (2) choosing, appointing, or terminating a
person or entity that participates in the hospital’s or health system’s
operation (e.g., board member, senior employee, or consultant).
INTERFERENCE WITH CLINICAL DECISIONS
Prohibited Conduct
The bill prohibits (1) DPH- or DMHAS- licensed health care facilities
or entities and (2) MSOs from directly or indirectly interfering with,
controlling, or otherwise directing the professional judgement or clinical
decisions of health care practices or clinicians with independent practice
authority who provide health care services through these facilities or
entities or at a health care practice.
This prohibition includes controlling (directly or indirectly) through 2025SB-01507-R000614-BA.DOCX
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discipline, punishment, threats, adverse employment actions, coercion,
retaliation, or excessive pressure any of the following:
1. the amount of time spent with patients or the number of patients
seen in a given time period, including the time allowed to triage
patients in the emergency department or evaluate admitted
patients;
2. the time period within which patients must be discharged;
3. decisions on patients’ clinical status, including whether they
should be kept in observation status or receive palliative care,
and where they should be placed after discharge;
4. the diagnosis, diagnostic terminology, or codes that are entered
into the medical record;
5. the appropriate diagnostic test for medical conditions; or
6. any other conduct DPH determines would interfere with, control,
or otherwise direct the professional judgment or clinical decision
of a clinician with independent practice authority.
Under the bill, clinicians with independent practice authority include
physicians, advanced practice registered nurses, and other health
providers given this authority under state law. MSOs are businesses that
provide, for compensation, management or administrative services to
health care providers or an organization of them (e.g., health care
practices).
Nondisclosure and Non-disparagement Agreements
Under the bill, any nondisclosure or non-disparagement agreement
entered into, amended, or renewed on or after July 1, 2025, regarding
the prohibited conduct described above to which a clinician with
independent practice authority is a party is void and unenforceable.
Similarly, the bill makes void and unenforceable any policy or
contract entered into, amended, or renewed on or after July 1, 2025, that
violates the bill’s provisions. If a court finds that a policy, contract, or 2025SB-01507-R000614-BA.DOCX
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contract provision is void and unenforceable under the bill, it must
award the plaintiff reasonable attorney’s fees and costs.
BACKGROUND
Related Bills
SB 1332 (File 133), favorably reported by the Aging Committee,
prohibits private equity companies and REITs from acquiring or
increasing their ownership interest, operational control, or financial
control in a nursing home starting October 1, 2025.
sSB 1480 (File 387), favorably reported by the Human Services
Committee, requires nursing homes or hospitals to be free of new
ownership interests by private equity companies or REITs in order to be
eligible for Medicaid reimbursement.
HB 6873, favorably reported by the Public Health Committee, adds
to the types of health care entities and transactions subject to review by
the attorney general under the antitrust laws, among other things.
COMMITTEE ACTION
Public Health Committee
Joint Favorable Substitute
Yea 32 Nay 0 (03/21/2025)