Connecticut Enacts Law Banning Hospital Sale-Leasebacks to Curb Private Equity Influence
Connecticut Governor Ned Lamont has signed into law a groundbreaking bill that restricts private equity's influence over hospitals and healthcare providers. Senate Bill 196, effective February 15, 2027, mandates that hospitals must ensure private equity firms have no controlling interest or governance authority over their operations. A significant provision of the law, effective July 1, 2027, prohibits hospitals from engaging in sale-leaseback transactions, where a hospital sells its real estate to another entity and then leases it back. This legislative move is a response to concerns about private equity's role in financially destabilizing healthcare systems, as seen in the bankruptcy of Prospect Medical Systems. The law aims to prevent similar situations by limiting financial maneuvers that could jeopardize hospital stability.