Delaware bans private equity hospital purchases, expands health care access

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Delaware Gov. Matt Meyer signed three pieces of legislation Monday, including a bill barring private equity companies from buying nonprofit hospitals in the state for the next two years.

Meyer and state lawmakers said the collapse of Crozer Health is a prime example of why the embargo is needed.

“It had a dramatic negative impact on our emergency system here in Delaware,” Meyer said. “A private equity firm siphoned out hundreds of millions of dollars from the hospital and saddled it with long-term debt. We cannot let that story play out in Delaware.”

California-based hedge firm Prospect Medical Holdings shuttered Crozer Health in 2025. Once Delaware County’s largest hospital system, it closed despite Pennsylvania, Delaware County, Penn Medicine and the Foundation for Delaware County funneling $46 million into it to keep it afloat amid bankruptcy proceedings.

Real estate investment firm Chariot Equities and for-profit nursing home operator Allaire Health Services bought Crozer-Chester Medical Center in January. The companies are looking to secure an operator for the Upland campus.

ChristianaCare, Delaware’s largest health system statewide, purchased some former Crozer Health outpatient locations.

Pennsylvania and Delaware are just two of several states trying to push back on private equity firms buying health care physician practices and facilities. However, a bill in the Pennsylvania General Assembly that would give the state’s attorney general more power to review hospital mergers for predatory behavior and anti-competitive business practices appears to be stalled in the state Senate.

The legislation signed Monday makes Delaware currently the only state to have an active two-year moratorium.

The other two pieces of legislation Meyer signed into law aim to help lower costs and expand access to care for Delawareans.

Bill expands hospital charity care

Senate Bill 13 creates a more robust standard for hospitals to provide charity care to patients, regardless of insurance coverage. Under the law, which will take effect next year, Delaware patients could get a discount on their bills if they meet certain income limits.

State Sen. Marie Pinkney, D-Bear, said she hopes the legislation will help people facing a catastrophic hospital bill.

“We are making sure that everyday Delawareans who are just trying to stay on the stability that they have built for themselves and their family will be protected,” she said. “Once they build themselves a foundation, it doesn’t get knocked from underneath them because of one medical emergency.”

Legislation caps hospital prices

Senate Bill 1 mandates increased investment in primary care, establishes new requirements for health insurers, hospitals and public employee health plans and sets a reimbursement ceiling.

The original version of the bill introduced reference-based pricing and would cap rates at 250% of what the federal government pays providers through Medicare.

Hospitals opposed the original version, and the sponsor, Senate Majority Leader Bryan Townsend, D-Newark, toned down some of the most controversial provisions before bringing it for a vote.

The changes delayed the implementation of price caps for hospital procedures until 2029, and they are being phased in, so they won’t be completely scaled down to 250% of Medicare until 2033.

Townsend said he disputes criticism from some that the bill had been “gutted.” He said that while some parts will take a few years to implement, other parts, like strengthening primary care access, will take effect immediately.

“It puts very serious cost containment measures in place and diverts resources that are desperately needed for primary care,” he said.