Sens. Ed Markey, Bernie Sanders and Richard Blumenthal introduced legislation Wednesday that aims to place guardrails on sale-leaseback deals with REITs.
The legislation, called the Stop Medical Profiteering and Theft Act, comes as the fallout from the closure of hospital facilities operated by Steward Health Care reverberates across the country.
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The bill would prohibit healthcare systems from entering a lease or sale agreement with a REIT "that could weaken the financial status of the health system or place public health at risk."
It would also allow the Department of Health and Human Services to review all leases to ensure they won't place those systems at a disadvantage and "close tax loopholes for REITs" for rental income gained from healthcare companies.
In 2016, hospital REIT Medical Properties Trust bought properties from Steward for $1.25B as part of a sale-leaseback agreement. MPT helped Steward expand to add 31 hospitals in eight states and lent the operator money.
Steward filed for bankruptcy in May 2024 because it couldn't pay at least $50M in rent owed to MPT. Steward's failure to pay rent led to nine-figure losses for MPT and put hospitals across the country in danger of closing.
Steward's deal with MPT put it in a precarious financial position that left it on the hook for expensive lease payments that led to millions in unpaid rent and debt.
Medical Properties Trust faced stern criticism about sale-leaseback deals, which involved charging rents that left hospital operators in positions of barely breaking even and, in some cases, financial instability and closures for hospitals.
In at least one case in Massachusetts, the governor invoked eminent domain to take over a hospital and transition it to new ownership, allowing it to remain open.
The new bill aims to curb such deals, which the senators labeled "predatory" in a release.
"The Steward Health Care crisis showed what happens when corporations put profits over patients,” Markey said in the release. "We must put guardrails in place to ensure health care systems, providers, and patients are protected from financial mismanagement driven by corporate greed."
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