OPINION: Misguided anti-merger bill would kill health care investment in NM

Fiftieth in education, 48th in crime and corrections, 45th in economy — as it stands today, New Mexico is in the bottom five nationally in almost every statistical category.

The one category where New Mexico does not yet rank pitifully low is in health care, 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 health care industry too joins the bottom five nationally.

This month, the Roundhouse will consider The Health Care Consolidation and Transparency Act, sponsored by House Majority Leader Reena Szczepanski, D-Santa Fe, and state Sen. Katy Duhigg, D-Albuquerque, and supported by Alice Kane, the New Mexico 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 Roundhouse legislators, who put forth a draft bill in February that, if passed, would require state approval of any health care acquisition or merger.

Now on the surface, we may say that sounds great that the state would protect our jobs — though how one exports health care 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 health care economic development in our state for the next decade.

How? Well, it’s no secret that most of the major growth in other states 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 New Mexico.

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 New Mexico. Karoo is a value-based care cardiology startup 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 New Mexico.

Duhigg said when unveiling the legislation that it would protect the people of New Mexico 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 health care 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 health care.

Pitchbook also estimated the cumulative revenues of private equity-backed health care providers at $118 billion per 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 health care 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, co-founder and CEO of Karoo Health, is on the board of trustees of Rehoboth McKinley Christian Health Care Services in Gallup.