Lawmakers are considering a bill that would prevent private equity companies or real estate investment trusts from acquiring or increasing ownership of Maine hospitals until June 2029.

Supporters said the moratorium would give lawmakers time to put in place safeguards and find other ways to support and protect Maine’s hospitals.

Sen. Michael Tipping, who introduced the bill, said there has been a “disturbing pattern” in other states like Connecticut and Rhode Island of private equity firms buying hospitals, then cutting staff to make a profit. And once they “squeeze it dry,” they sell it off and leave town.

“We already have an unstable health care system with hospitals across the state facing difficult financial situations and the shuttering of services,” Tipping said during a public hearing Tuesday. “What that could lead to is a breaking of the dam of nonprofit ownership in this state, for the first time having major Maine hospitals run for the benefit of shareholders rather than patients.”

He added an amendment that would exempt any hospital sale where paperwork was filed before June 1, in order to not inhibit the current sale of Central Maine Healthcare to a California-based nonprofit. The nonprofit is not owned by private equity, according to later testimony, but is sponsored by a private, for-profit business that generates profit through contracts for management services and supplies

Tipping said he had some concerns about that sale, but “I wanted to give the committee the opportunity to have this bill only applied to future transactions.”

Maine hospitals have been struggling financially since the pandemic, with Northern Light Health reporting a $156 million loss in 2024 and planning to close its Waterville hospital in June.

Multiple health care experts testified in support of the measure, citing research and examples of how profit-driven models of private equity can lead to poor patient outcomes.

An example of this happened in Massachusetts: A Boston Globe Spotlight investigation into the downfall of the Steward Health Care hospital system documented the close relationship between Steward and Medical Properties Trust, a real estate investment trust that specializes in buying hospital buildings and land and then leasing them back to the hospital.

Spotlight found that MPT helped the struggling Steward to make rent payments and hid its financial problems from investors, all while executives pocketed tens of millions. Steward filed for bankruptcy last year and has since closed five of its hospitals.

The Private Equity Stakeholder Project, a nonprofit watchdog group, found that about 488 hospitals in the United States — 8.5 percent of all private hospitals and 22.6 percent of all for-profit hospitals — were owned by private equity as of April. The list does not include any in Maine.

Out of an estimated 80 healthcare bankruptcies in 2023, PESP found that at least 17 of those companies were backed by private equity firms.

The Maine Nurses Association and Consumers for Affordable Health Care testified in support of the bill. No one testified in opposition. MaineHealth, the Maine Hospital Association and the Maine Office of Affordable Health Care testified neither for nor against. 

The Health Coverage, Insurance and Financial Services committee will next decide whether to forward the bill for a vote by the full Legislature.

This story was originally published by The Maine Monitor, a nonprofit civic news organization. To get regular coverage from The Monitor, sign up for a free Monitor newsletter here.