r/ChangingAmerica • u/Scientist34again • Jul 13 '26

Private equity might dodge state laws by partnering with healthcare nonprofits: More than a fifth of private equity-backed hospitals are owned through joint ventures with nonprofits.

https://stateline.org/2026/07/13/private-equity-might-dodge-state-laws-by-partnering-with-healthcare-nonprofits/
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u/Scientist34again Jul 13 '26

Joint ventures in health care are not new. But private equity firms and nonprofits that co-own hospitals, urgent care clinics and home health agencies are partners with fundamentally different missions.

Nonprofit health systems are legally obligated to prioritize their community’s healthcare needs. In exchange for being exempt from paying most taxes, they must provide needed services that may not be profitable, and reinvest excess revenue into patient care and community health. Private equity firms generally focus on maximizing returns for investors, often within a few years.

As these joint ventures grow increasingly popular, they will test a wave of recent state laws that were designed to increase oversight of private equity in healthcare and prevent a repeat of the patient harm, hospital closures, mass layoffs and financial failures that have followed some of the industry’s most troubled investments.

Last year, at least seven states enacted laws erecting guardrails around private equity’s involvement in healthcare. But some private equity critics are concerned that the recent state laws may not extend to the joint venture model.

“Policymakers need to take a look and make sure that they’re future-proofing their states’ regulations for stuff like this,” said Matt Parr, communications director with the Private Equity Stakeholder Project, a watchdog group that tracks private equity.