CONNECTICUT — The Connecticut Senate passed Senate Bill 196, which would bar private equity investors from owning a majority stake in the main campus operations of any hospital, and sent the measure to the House for a vote. The legislation marks the third consecutive year lawmakers have moved to address the fallout from private equity ownership of three Connecticut hospitals.

The bill would also prohibit any private equity investor from involvement in clinical decision making and prevent hospitals from selling the buildings of their main campuses to a real estate investment trust in a sale-leaseback transaction. Sale-leaseback transactions allow private equity investors to generate returns from hospital investments while leaving hospitals responsible for paying rent.

Proposals to curb private equity investment in health care have failed to pass despite years of bipartisan calls for reform. Last year, Governor Ned Lamont and legislators each put forth separate proposals to prevent private equity investors from harming Connecticut hospitals, but the session ended without passing a bill that combined the two approaches. Each side blamed the other for the failure.

Rep. Cristin McCarthy Vahey, D-Fairfield, pointed to progress since the previous session. "A year ago, there was uncertainty about what some of those provisions that we were discussing might mean, and now those are resolved. I think that is a really big factor in terms of our ability to move forward," she said.

Public Health Committee co-chairs have been in regular talks with Lamont's office over the last several months. "We have been in robust conversations for the past two months," Public Health Committee co-Chair Sen. Saud Anwar, D-South Windsor, said. "Our hope is that both of them will succeed," he said.

Lamont's spokesperson did not confirm whether the governor supports Senate Bill 196 but reiterated his commitment to reining in private equity. "For the past several sessions, the Governor has put forward comprehensive legislation to ensure financial oversight of hospitals to help us protect patient care," Cathryn Vaulman wrote in an emailed statement. "Profits should not come before people," she wrote.

Hospitals previously owned by bankrupt Prospect Medical Holdings, a hospital operator backed by private equity, have found new buyers. At the start of the year, Manchester Memorial and the Rockville campus became part of Hartford HealthCare. In March, the University of Connecticut Health Center took over Waterbury Hospital.