On May 27, 2026, Connecticut Governor Ned Lamont signed into law Public Act 26-22, “An Act Concerning Hospital Sale-Leaseback Agreements and Attestations Concerning Lack of Private Equity Control of the Hospital and Control of or Interference with the Professional Judgment and Clinical Decisions of Certain Health Care Providers” (PA 26-22). PA 26-22 prohibits Connecticut hospitals from entering into “sale-leaseback transactions” and requires them to submit annual attestations disclaiming certain private equity interests in or authority over the hospital.
First, PA 26-22 prohibits Connecticut hospitals entering into sale-leaseback transactions, which are defined as any transaction where a “hospital enters into an agreement with a person or another entity to sell and lease back hospital-owned real property that constitutes the main campus of a hospital.” For purposes of this prohibition, PA 26-22 defines a hospital’s main campus as the “licensed premises within which the majority of inpatient beds are located.” Accordingly, PA 26-22 restricts the ability of a hospital to enter into a sale-leaseback arrangement involving its campus but does not apply to off-campus hospital-owned locations. For purposes of PA 26-22, a “private equity entity” is defined as “any entity that collects capital investments from individuals or entities and purchases, as a parent company or through another entity that the entity completely or partially owns or controls, a direct or indirect ownership share of a hospital.”
Second, PA 26-22 establishes a new attestation requirement requiring hospitals to disclaim private equity involvement in their ownership, governance, and operations. Beginning on February 15, 2027, and annually thereafter, each hospital in Connecticut must submit an attestation to the Commissioner of Public Health’s Office that no private equity entity:
- Has a controlling interest (meaning “direct or indirect power to direct the management and policies of the main campus of a hospital, whether through ownership of voting securities, contract or other means”) in the hospital.
- Has ultimate governance control and authority over any hospital asset or activity of the main campus of the hospital, including without limitation any clinical, operational, managerial, financial, or human resources matter.
- Is permitted to control or direct any procedure or policy that would interfere with professional judgment or clinical decisions of authorized clinicians, including time spent with patients, number of patients seen, time spent on triage or admission evaluations, time periods for patient discharge, clinical decision making including related to observation status or palliative care, diagnostic testing, or coding determinations in the medical record.
Failure to comply with the attestation requirement will result in a civil penalty of up to $2,000 per violation. However, PA 26-22 also clarifies that it does not prohibit hospitals or their affiliates from investing in joint ventures or entering into clinical services contracts with physicians, nor is it intended to interfere with a hospital coordinating with its parent health care system.
The Act demonstrates a continued focus by Connecticut on private equity business arrangements involving hospitals in the wake of notable bankruptcy and reorganization matters involving private equity-owned health systems in Connecticut and neighboring states. It remains to be seen how the ownership/control attestation and heightened scrutiny provided for by PA 26-22 will impact private equity investment in health care in Connecticut.