The Mergers and Acquisitions bill that will kill N.M. health investment

By Ian Koons
Fiftieth in education, No. 48th in Crime and Corrections, No. 45th in Economy. As it stands today New Mexico is in the bottom five nationally in almost every statistical category. The one category where N.M. does not yet rank pitifully low is in healthcare, where we currently sit at #38th nationally. However, a group of misinformed legislators have put forth a bill that will guarantee that the state’s healthcare industry too joins the bottom five nationally.
This month the Round House will consider The Health Care Consolidation and Transparency Act, sponsored by House Majority Leader Reena Szczepanski (D-Santa Fe) and Sen. Katy Duhigg (D-ABQ), and supported by Alice Kane, the N.M. superintendent of insurance. Under the guise of protecting our state from moving our biggest employers out of state, Szczepanski and Duhigg, I believe, have miscalculated what this bill will do. These legislators have said this is in response to the failed Presbyterian Healthcare Services merger in 2023, whereby a select few executives had moved to Denver ahead of a potential merger with Unity Point out of Iowa. This merger ultimately did not come to fruition, but a side effect has been to rile up Round House legislators, who put forth a draft bill in February that, if passed, would require state approval of any healthcare acquisition or merger.
Now on the surface, we may say that sounds great that the state would protect our jobs (though how one exports healthcare jobs is a bit of a mystery as the sick people would ostensibly remain here). However, what they fail to understand is this bill will kill healthcare economic development in our state for the next decade. How? Well, it’s no secret that most of the major growth in other states (see Arizona and Texas, the former was the same size as N.M. in 1989!) comes from investment dollars into startups and technology that fosters economic growth. If investors know up front a state government will determine whether a sale or merger can happen, they will never invest in N.M.
This will cause the tiny venture-backed startup community to continue to shrink. Now you may ask what authority or insight I may carry? I am, in fact, the co-founder and CEO of Karoo Health, one of the only venture-backed businesses in N.M. Karoo is a value-based care cardiology start up working in 10 states. We have raised nearly $7 million so far and are scheduled to raise another $20 million — and create hundreds of jobs — in the next year. As a result of this bill, we must seriously consider bringing those jobs here — thereby handing an oversight committee the power to block any sale or merger my company might entertain. This is a small example of the ripple effect this bill will have on economic development, but hopefully paints a picture of the shortsighted and misinformed threat this bill has on N.M.
Duhigg said when unveiling the legislation that it would protect the people of N.M. from the rapaciousness of private equity and from unfair market practices. “This is really a monopoly issue,” Duhigg told KUNM in May. “This is an antitrust issue, and we don’t have great antitrust laws here in New Mexico.”
But the failed Presbyterian Merger upon which this measure is based did not involve any private equity. Private equity-backed healthcare providers account for less than 4% of the U.S. provider ecosystem, according to a 2024 Pitchbook analysis. A similar measure in California has stalled due to concerns that it would stifle innovation and investment in healthcare.
Pitchbook also estimated the cumulative revenues of private equity-backed healthcare providers at $118 billion/year, just 3.3% of the $3.5 trillion in revenue nationally. For comparison, the 2023 revenue of OPTUM Health alone was $95 billion. Also of note, current private equity deal activity in U.S. hospitals and skilled nursing facilities, or SNFs, is near zero. Hospital and SNF deals have accounted for less than 1% of private equity healthcare services deals since 2022.
I love our beautiful state. I want to raise my three kids here, near my wife’s sprawling family. But this bill may force us to consider moving to a state more interested in the long-term health of their citizens, and the companies innovating to ensure that.
Ian Koons is co-founder and CEO Karoo Health; Karoo provides wraparound services and technology to enable the transition from fee for service to value based care for some of our most most vulnerable populations in partnership with over 750 cardiologist providers nationwide.