United States: Baby HSRs: States Are Modeling Laws After Federal Act To Investigate More Transactions
Hannah Myslik Maloney

Highlights

• In a growing trend, states are enacting laws modeled after the federal Hart-Scott-Rodino (HSR) Act, which requires parties to proposed transactions that satisfy certain reporting thresholds to first provide information to the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ).
• Known as "mini HSRs" or "Baby HSRs," these state laws establish similar notification requirements but are designed to cover transactions that are below the federal threshold.
• This Holland & Knight alert details the states that have enacted Baby HSRs or other pre-transaction notification requirements as applicable to the healthcare industry and provides a summary of each state's notification requirements.

In a growing trend, states are enacting laws modeled after the federal Hart-Scott-Rodino (HSR) Act, which requires parties to proposed transactions that satisfy certain reporting thresholds to first provide information to the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ). Known as "mini HSRs" or "Baby HSRs," these state laws establish similar notification requirements but are designed to cover transactions below the federal threshold. Many Baby HSRs specifically target certain industries, particularly healthcare.

This Holland & Knight alert details the states that have enacted Baby HSRs or other pre-transaction notification requirements as applicable to the healthcare industry – California, Colorado, Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont and Washington – and provides a summary of each state's notification requirements.¹ In addition, this chart provides an overview of the requirements.

Future Developments

Baby HSRs and other pre-transaction notification statutes, particularly those aimed at regulating healthcare transactions, are only gaining popularity. Other states are currently considering similar legislation. These laws vary widely among states and have broad impacts, and healthcare entities implicated should closely monitor these changes.

For more information or assistance regarding Baby HSRs and other pre-transaction notification statutes, please contact the authors or another member of Holland & Knight's Antitrust Team.

California

California's Health Care Quality and Affordability Act² establishes premerger notification and filing requirements for certain healthcare transactions and tasks the Office of Health Care Affordability (OHCA) with 1) drafting and implementing rules governing which entities and transactions must comply, 2) the notice and filing requirements for those entities and transactions and 3) the applicable review period. In August 2023, OHCA published draft regulations that would require a 90-day waiting period before closing any transaction that would result in a material change to any healthcare entity that is a party to the transaction.³

Who Must File

Healthcare entities that are parties to covered transactions must file the notice. Healthcare entities are defined as payers, providers, fully integrated delivery systems, pharmacy benefit managers, management services organizations and any of their respective affiliates. However, transacting healthcare entities must file notice only if one of them meets one of the following qualifications:

• has an annual revenue of at least $25 million or controls at least $25 million of California assets
• has an annual revenue of at least $10 million or at least $10 million of California assets and is transacting with a healthcare entity that has an annual revenue of at least $25 million or that has at least $25 million of California assets
• is located in, or serves at least 50 percent of patients who reside in, a health professional shortage area (HPSA)

Transactions Covered

Any transaction that would result in a material change to the ownership, operations or governance of any transacting healthcare entity. OHCA's draft regulations list the following nine types of transactions that would trigger material changes requiring notice to OHCA:

• has a proposed fair market value of $25 million or more
• is likely to increase the annual revenue of any healthcare entity that is a party to the transaction by at least $10 million or 20 percent of annual revenue
• involves the disposition of 20 percent or more of the assets of any healthcare entity that is a party to the transaction
• involves the transfer or change in control, responsibility or governance of a healthcare entity that has any of the three qualifications listed under "Who Must File" above
• contemplates an entity negotiating or administering contracts with payers on behalf of one or more providers and involves an affiliation, partnership, joint venture or other organization
• involves the formation of a new healthcare entity for the provision of healthcare services in California that is projected to have at least $25 million in annual revenue
• involves the healthcare entity joining, merging or affiliating with another healthcare entity where any healthcare entity has at least $10 million in annual revenue
• changes the form of ownership of a healthcare entity that is a party to the transaction, including physician-owned to private equity-owned and publicly held to privately held
• involves, as a party to the transaction, a healthcare entity that has consummated any transaction regarding provision of healthcare services in California with another party to the transaction within 10 years before the current transaction

Notice Period

Healthcare entities must notify OHCA of proposed transactions at least 90 days before closing.

Notice Contents

Healthcare entities must file a substantial amount of information, including detailed descriptions of 1) all entities involved in the transaction, 2) the pending transaction (including whether the transaction has been subject to prior investigations and what material changes are involved) and 3) the entities' prior transactions.

Review Period

Within 60 days of receiving notice, OHCA will inform each party to a noticed transaction of its determination to either approve the transaction or conduct a cost and market impact review of the transaction. OHCA may toll this 60-day time period. OHCA will decide to conduct a cost and market review if it finds that the material change is likely to have a significant impact on market competitions. If OHCA decides to conduct a cost and market impact review, within 10 days, the transacting healthcare entities may request OHCA to review its decision. If OHCA goes forward with the review, the parties may have to supply additional information as requested by OHCA to assist with its review. OHCA should issue its preliminary report on its cost and market review findings within 90 days but may extend the 90-day period by one additional 45-day period if it needs time to complete the review. Within 10 days after receiving the preliminary report, the transacting parties may submit comments in response to the report. Within 30 days (or more if good cause is shown) of the comment period closing, OHCA will issue its final report. After publishing its final report, OHCA may refer its findings to the Attorney General (AG) for further review of any anticompetitive behavior.

Effective Status

Effective April 1, 2024.

Colorado

Colorado requires hospitals that are parties to a covered transaction to provide the Attorney General (AG) with 60 days' written notice before closing the transaction, but the contents of the notice and the AG's review criteria depend on whether the transaction has a nonprofit entity as a party.⁴

Who Must File

If a licensed or certified hospital is a party to a covered transaction, the parties to the transaction must file notice. Licensed or certified hospitals include psychiatric hospitals, community clinics, rehabilitation hospitals, convalescent centers, community mental health centers, acute treatment units, facilities for persons with intellectual and development disabilities, nursing care facilities, hospice care, assisted living residences, dialysis treatment clinics, ambulatory surgical centers (ASCs), birthing centers, home care agencies and other facilities of like nature, except those wholly owned and operated by any governmental unit or agency.

Transactions Covered

A transaction in which a licensed or certified hospital is a party is covered by the notice requirements if the transaction:

• is an individual transaction that would result in the disposition of 50 percent or more of the hospital's assets
• is a series of transactions taking place in any 5-year period, which would result, in the aggregate, of the transfer of 50 percent or more of the hospital's assets
• would result in the disposition of control of a parent company, holding company or other entity controlling a hospital

Notice Period

Parties to a covered transaction must notify the AG no later than 60 days before the transaction's closing or effective date.

Notice Contents

Notices for all covered transactions – regardless of whether it involves nonprofit, for-profit entities, or both – must contain a certification that the transacting parties will give public notice of the transaction within seven days after notifying the AG. If the transaction involves a nonprofit hospital, the parties must provide additional information in their notice.

• Transactions Between Nonprofit Entities: If all transacting parties are nonprofit entities, notice sent to the AG must contain a statement on the charitable purposes of each nonprofit entity entering into the covered transaction and concerning the relationship of these purposes to the hospital involved in the transaction.
• Transactions Between Nonprofit and For-Profit Entities: If the transaction involves at least one nonprofit entity transacting with a for-profit entity, the transacting parties must submit to the AG all proposed agreements relating to the proposed transaction and any collateral transactions, financial and economic reports the nonprofit entity relied on in negotiating the proposed transaction, and an explanation that the transaction will comply with Colorado's requirement that the transaction be in the public interest.

Review Period

Regardless of whether the entities involved in the transaction are for-profit, nonprofit or both, there are no strict timelines for the AG's review. Additionally, there is no specific review criteria for a transaction between for-profit entities. However, the AG's review criteria varies depending on whether the transaction includes parties that are both for-profit and nonprofit or includes parties that are just nonprofit.

• Transactions Between Nonprofit Entities: The transaction will proceed without further review if the AG determines that the transaction will not result in a material change to the charitable purposes to which the hospital's assets have been dedicated, and will not result in a termination of the AG's jurisdiction over those assets. In considering whether the transaction would result in a material change, the AG considers, among other factors, reductions in the availability and accessibility of healthcare services in the communities served by the hospital. If the AG finds that the transaction would result in a material change, the AG has the discretion to decide whether to further review the transaction.
• Nonprofit to For-Profit Transactions: The AG will determine whether to conduct a formal assessment and review of the transaction. If the AG decides to conduct a formal assessment, no later than 30 days after receiving notice from the transacting parties, the AG will hold at least one public hearing in the service area of the hospital involved in the transaction. In conducting its formal assessment of the transaction, the AG may subpoena documents or witnesses and may file an action with a court if the transacting parties do not comply with the AG's requests for additional information regarding the transaction. If the AG determines that the transaction is in the public interest, the AG will issue a written assessment and report approving the transaction.

Effective Status

Currently effective.

Connecticut

Connecticut requires parties to a transaction to give the Attorney General (AG) 30 days' notice before the transaction's effective date if one of the parties to the transaction is a group practice and the transaction would result in a material change to the group practice.⁵ Irrespective of whether the transaction involves a group practice, if the transaction involves a hospital, hospital system or other healthcare provider and the parties must file federal HSR notice, the parties must file a copy of their HSR filing with the AG at the same time the parties file their federal HSR notice.

Who Must File

There are two groups of parties that must give notice:

• Parties to transactions in which a group practice is a party. A group practice is the organization of two or more physicians who render professional services through the group and share overhead expenses.
• Parties must also file notice if a hospital, hospital system or other healthcare provider is a party to the transaction and the parties must file federal HSR notice for that transaction.

Transactions Covered

There are two groups of transactions covered:

• If the transaction involves a group practice, the transaction is covered if it would result in a material change to the business or corporate structure of a group practice. Generally, a material change involves either the combination of group practices totaling at least eight physicians or a hospital's acquisition of any group practice.
• A transaction is also covered by the notice requirements if it involves a hospital, hospital system or other healthcare provider and the transaction is subject to federal HSR notice requirements.

Notice Period

There are two notice periods:

• For a transaction that involves a material change to a group practice, the parties must notify the AG at least 30 days before the transaction's effective date.
• For a transaction that involves a hospital, hospital system or other healthcare provider that is required to file federal HSR notice, the parties must notify the AG simultaneously to filing federal HSR notice.

Notice Contents

The notice contents vary depending on the transaction covered:

• If the transaction involves a material change to a group practice, transacting parties must identify each party to the transaction and describe the material change the transaction will pose to the group practice's business or corporate structure, identify the names and specialties of each physician in the group practice, the location of services to be provided and the primary service area to be served.
• If the transaction involves a hospital, hospital system or other healthcare provider and is subject to federal HSR notice requirements, transacting parties must notify the AG of the HSR filing and submit a copy of the HSR filing upon the AG's request.

Review Period

There is no strict timeline for review for either covered transaction. If the AG determines any covered transaction will negatively impact competition, the AG may require more information from the transacting parties to investigate the transaction.

Effective Status

Currently effective.

Hawaii

Before engaging in a transaction that involves acquiring a hospital, transacting parties must give notice and submit an application seeking approval from the State Health Planning and Development Agency (the Agency). Parties must give the Attorney General (AG) 90 days' notice of the impending transaction and may need to receive approval from the AG to proceed.⁶

Who Must File

Any party engaged in a transaction involving the acquisition of a hospital. A hospital is an institution with an organized medical staff that admits patients for inpatient, diagnosis, observation and treatment. Hospitals do not include public health facilities.

Transactions Covered

An acquisition of an ownership or controlling interest in a hospital that results in a change of ownership or control of 20 percent or greater, or results in the acquiring person holding a 50 percent or greater interest in the ownership or control of the hospital.

Notice Period

Parties may not engage in a hospital acquisition before notifying and submitting an application to the Agency and the AG. The transacting parties must give the AG 90 days' notice of the impending transaction.

Notice Contents

The 90 days' notice must describe the impending acquisition, including any change in ownership of tangible or intangible assets. The application to the Agency and AG must provide information about the parties to the transaction, the transaction's terms and a financial and economic analysis from an independent expert or consultant on the acquisition's effect.

Review Period

The Agency will review and approve or disapprove of the acquisition within 90 days after receiving the application. Within 20 days of receiving the application, the AG will determine whether to conduct a review. If the AG determines that a review is appropriate, the AG will approve the application unless the AG determines the acquisition is not in the public interest. The AG will conduct this review within 90 days of receiving the application. If the AG does not conduct the review within 90 days, the application will be deemed approved.

Effective Status

Currently effective.

Illinois

Illinois requires healthcare facilities or provider organizations that are parties to a covered transaction to give the Attorney General (AG) 30 days' written notice before closing the covered transaction. Whether the transaction is covered and the notification requirements for covered transactions vary depending on whether the transaction involves in- or out-of-state healthcare entities.⁷

Who Must File

Healthcare facilities or provider organizations that are parties to a covered transaction. A healthcare facility includes ambulatory surgical treatment centers, institutions used for outpatient surgical procedures and institutions required to be licensed under Illinois' Hospital Licensing Act. A provider organization means a corporation, partnership or organized group of persons who are in the business of healthcare delivery or management and who represent 20 or more healthcare providers in contracting for the payment of healthcare services.

Transactions Covered

Parties are required to give notice if the transaction 1) is any merger, acquisition or contracting affiliation between two or more healthcare facilities or provider organizations not previously under common ownership or contracting affiliation and 2) one of the following situations is satisfied:

• the transaction is between an Illinois healthcare entity and an out-of-state entity where the out-of-state entity generates $10 million or more in annual revenue
• the transaction is between Illinois healthcare entities

Notice Period

For all covered transactions, the parties must give the AG 30 days' notice before the transaction's closing.

Notice Contents

The notice requirement is satisfied if the parties to any covered transaction do one of the following:

• submit a copy of their federal HSR filing to the AG
• file an application for a change of ownership with the Health Facilities and Services Review Board (HFSRB); the Board will provide a copy of the filing to the AG
• send notice to the AG that includes party information and details regarding the transaction's nature and purpose, identification of all locations where healthcare services are currently provided by each party and anticipated effective date of the transaction

Review Period

The transaction may not proceed until 30 days after parties submit the requisite notice. However, once the 30 days pass, the AG's approval is not necessary for the transaction to proceed. However, the AG may open an investigation if the AG determines the transaction is anticompetitive.

Effective Status

Effective Jan. 1, 2024.

Massachusetts

Massachusetts requires that providers or provider organizations with $25 million or more in net patient service revenue give the Health Policy Commission (the Commission), Center for Health Information and Analysis (the Center) and Attorney General (AG) 60 days' notice before completing a material change to any of the providers or provider organizations that are parties to the transaction.⁸

Who Must File

Every party to a covered transaction that is a provider or provider organization with $25 million or more in net patient service revenue is subject to the notice requirements. A provider includes any entity that is qualified to perform or provide healthcare services in Massachusetts. A provider organization is any entity that represents one or more healthcare providers in contracting with carriers for the payment of healthcare services.

Transactions Covered

A transaction is covered if it would result in a material change to any provider or provider organization's business. A material change to business includes, but is not limited to, a corporate merger, acquisition or affiliation of a provider or provider organization and carrier; mergers or acquisitions of hospitals or hospital systems; acquisition of insolvent provider organizations; and mergers or acquisitions of provider organizations that will result in a provider organization having a near-majority of market share in a given service or region.

Notice Period

The providers or provider organizations that are parties to a covered transaction must give the Commission, the Center and the AG 60 days' written notice before the date of the proposed material change.

Notice Contents

The notice must include details concerning the parties to the transaction and the type, nature of and reasons for the material change proposed.

Review Period

Within 30 days after receiving notice, the Commission will conduct a preliminary review to determine whether the material change would likely impact the competitive market. If the Commission determines that the material change is likely to negatively impact the competitive market, the Commission may conduct a cost and market impact review. After conducting the cost and market impact review, the Commission will issue a preliminary report. The provider or provider organization may respond in writing to the report within 30 days. The Commission will then issue its final report. The final report should be issued 185 days after the Commission first receives notice. The Commission may refer its report to the AG for further investigation.

Effective Status

Currently effective.

Minnesota

Minnesota recently expanded its premerger notification requirements for healthcare transactions. These requirements vary depending on transaction size – regulated healthcare entities must give the Commissioner of Health (the Commissioner) and the Attorney General (AG) either 30 or 60 days' notice before a covered transaction's closing.⁹ Filing requirements also vary depending on transaction size.

Who Must File

Any healthcare entity that is a party to a covered transaction must provide notice. Healthcare entities are hospitals and hospital systems, healthcare provider group practices, medical foundations or captive professional entities. Both for-profit and nonprofit healthcare entities are subject to the notice requirement.

Transactions Covered

Minnesota law defines a transaction as a single action or series of actions within a five-year period 1) occurring in part within Minnesota or 2) involving a healthcare entity formed or licensed in Minnesota. An "action" encompasses a wide range of activity, including mergers with, sales of and the creation of new healthcare entities. A transaction is subject to notice requirements if it fits into one of two categories:

• Small Transactions: the healthcare entity involved has an average annual revenue between $10 million and $80 million
• Large Transactions: the healthcare entity involved has an average annual revenue of at least $80 million per year

Notice Period

The applicable notification period varies depending on whether the covered transaction is small or large:

• Small Transactions: The healthcare entity must provide notice to the Commissioner and AG 30 days before the proposed completion date of the transaction or within 10 days if the parties anticipate closing the transaction in less than 30 days.
• Large Transactions: The healthcare entity must provide notice to the Commissioner and AG 60 days before the transaction's proposed completion date (the AG may choose to extend this time period by an additional 90 days).

Notice Contents

The transacting parties must disclose an extensive amount of information in their notice. This includes information regarding the entities involved in the transaction, transaction agreements, expert reports conducted in evaluating the transaction, relationship between the entities involved and affected healthcare providers, the primary and proposed service area for each location, markets to be impacted by the transaction and tax records for all entities involved in the transaction.

Review Period

The AG and Commissioner are not required to review the notice and filings in a specific amount of time. However, after receiving the notice contents, the Commissioner will analyze the transaction's potential impact on healthcare cost, quality, and competition. Moreover, if the AG determines the transaction is anticompetitive or otherwise harms the public interest, the AG may bring a civil action to enjoin or unwind the transaction.

Effective Status

• Small Transactions: Effective Jan. 1, 2024.
• Large Transactions: Currently effective.

Nevada

Nevada law requires transacting parties to give the Attorney General (AG) 30 days' notice before completing a healthcare or health carrier transaction that would result in a material change to the business or corporate structure of a group practice or health carrier and would result in the group practice or health carrier providing 50 percent or more of a healthcare service within a geographic market.¹⁰

Who Must File

Notification requirements are imposed on all parties to a reportable healthcare, health carrier or group practice transaction. A health carrier is an entity that contracts or offers to contract to provide, deliver, arrange for, pay for or reimburse any of the costs of healthcare services. A group practice is two or more practitioners legally organized into a partnership or other legal entity where 1) each practitioner regularly provides healthcare services, 2) the majority of services are provided by the group practice and 3) the practitioners share overhead expenses.

Transactions Covered

A reportable healthcare transaction means any transaction that would both:

• result in the material change to the business or corporate structure of a group practice or health carrier (a material change includes, but is not limited to, mergers and acquisitions of all or substantially all of the properties, stock or employment of a group practice)
• cause a group practice or health carrier to provide within a geographic market 50 percent or more of any healthcare service

Notice Period

Transacting parties must notify the AG at least 30 days before the covered transaction's consummation.

Notice Contents

The notification must briefly describe the nature of the parties' proposed relationship, give the names of the practitioners and businesses involved, identify the location of the proposed healthcare services and describe the services and the primary service area. Alternatively, transacting parties may satisfy the notice requirement by submitting a copy of their federal HSR filing, if any, to the AG.

Review Period

There are no explicit review periods, and the AG's approval is not required for a transaction to proceed. However, if the AG believes a violation has occurred, the AG may investigate the transaction.

Effective Status

Currently effective.

New York

New York's pre-transaction notice law, which became effective August 2023, requires healthcare entities that are parties to material transactions to provide the New York Department of Health (DOH) 30 days' written notice before closing the transaction.¹¹

Who Must File

Healthcare entities that are parties to a covered transaction must file the requisite notice. A healthcare entity is defined broadly to include physician practices, physician groups, management services organizations or similar entities providing all or substantially all of the administrative or management services under contract with one or more physician practices, provider-sponsor organization, health insurance plan or any other kind of healthcare facility, organization or plan that provides healthcare services in New York.

Transactions Covered

A transaction is covered if, whether occurring in a single transaction or series of transactions within a 12-month period, it is both 1) material and 2) would result in any healthcare entity that is party to the transaction increasing its total in-state revenue by at least $25 million. A material transaction includes a merger with a healthcare entity, an acquisition of one or more healthcare entities, an affiliation agreement formed between a healthcare entity and another person, and a healthcare entity formation for the purpose of administering healthcare contracts.

Notice Period

Healthcare entities must give the DOH 30 days' written notice before the transaction's closing.

Notice Contents

Parties must provide party information, agreement copies, details about what locations may be impacted by the transaction, any plans to eliminate services or plan participation, and a detailed description of the transaction.

Review Period

During the 30-day period before the closing date, the DOH will make public information concerning the transaction by posting on its website an explanation of entities or individuals likely to be impacted by the covered transaction. The DOH's approval is not required for the transaction to proceed, but the healthcare entities that are parties to the transaction must notify the DOH once the transaction is closed.

Effective Status

Currently effective.

Oregon

Oregon has one of the most comprehensive pre-transaction review processes in the country. Oregon requires healthcare entities to give the Oregon Health Authority (OHA) 180 days' notice before closing on material transactions. The OHA must then review and approve the transaction before the transaction can proceed.¹²

Who Must File

Healthcare entities that are parties to material transactions must file the requisite notice. Healthcare entities include individual health professionals licensed or certified in Oregon, a hospital or hospital system, a carrier that offers a health benefit plan in Oregon, a Medicare Advantage plan, a coordinated care organization or a prepaid managed care health services organization, and any other entity that provides healthcare services as a primary function.

Transactions Covered

Oregon's pre-transaction notice requirements apply to material transaction involving healthcare entities. A material transaction means a transaction in which 1) at least one party to the transaction had an average revenue of $25 million or more in the preceding three years and 2) at least one other party had at least $10 million in revenue in the preceding three years or, if a new entity, is projected to have at least $10 million in revenue the first full year of operation. If these conditions are satisfied, a transaction that is between an Oregon healthcare entity and an out-of-state entity is still subject to notice requirements if the transaction may result in increases in the price of healthcare or limit access to healthcare services in Oregon.

Notice Period

Healthcare entities that are parties to the material transaction must give the OHA notice no less than 180 days before the transaction's closing date.

Notice Contents

Healthcare entities that are parties to the transaction must provide detailed information about the transaction and all entities involved, including the transaction's nature and objectives, anticipated operational or management changes resulting from the transaction, impact of the proposed transaction on the public, whether the transaction will decrease competition and whether the transaction is for the public good.

Review Period

Within 30 days after receiving the notice required, the OHA will conduct a preliminary review to determine if the transaction has the potential to negatively impact access to affordable healthcare in Oregon. The OHA will then either approve the transaction or conduct a more thorough, comprehensive review. The comprehensive review must be complete within 180 days after the OHA first received notice. If the transaction passes the comprehensive review, the healthcare entities that are parties to the transaction may engage in the material change transaction as long as the transacting parties showed, in submitting their notice or in response to OHA inquiries, that the transaction is for the public good.

Effective Status

Currently effective.

Rhode Island

Rhode Island's Hospital Conversions Act requires all parties involved in a transaction that consists of transferring the ownership, control or possession of 20 percent or more of a hospital to seek prior approval from the state's Department of Health (DOH) and Attorney General (AG).¹³

Who Must File

All transacting parties if the transaction involves the conversion of a hospital. The Hospital Conversions Act defines a hospital as a person or governmental entity licensed to establish, maintain or operate a hospital.

Transactions Covered

A transaction is covered if it is a conversion, which is defined as a transfer that results in a change of ownership, control or possession of 20 percent or more of the members or voting rights or interests of a hospital or of the assets of a hospital, or the removal, addition or substitution of a partner that results in a new partner gaining interest in a hospital.

Notice Period

Parties may not begin engaging in the conversion of a hospital without receiving approval from the DOH and AG.

Notice Contents

Parties required to give notice must submit an extensive amount of information, including a detailed summary of the proposed conversion, transacting parties' information, patient statistics for the last three years, agenda and minutes of all board of directors meetings related to the conversion, conflict of interest statements and other details regarding the proposed transaction.

Review Period

Within 30 days of accepting the application – meaning the AG and DOH find that the application provides all the necessary information – the AG and DOH will determine whether to proceed with their review of the application. If the AG and DOH decide to review the application, the AG and DOH will approve, conditionally approve or disapprove the application within 180 days after they accepted the application. In reviewing the application, the AG and DOH will consider whether, among other things, the proposed conversion will harm the public interest.

Effective Status

Currently effective.

Vermont

Vermont requires that each hospital that is a party to a transaction in which the hospital will acquire a medical practice give the Attorney General (AG) at least 90 days' notice before the effective date of such transaction.¹⁴

Who Must File

A hospital must file notice if it is a party to a transaction in which the hospital will acquire a medical practice. A hospital is a general hospital or hospital facility. A medical practice is a business through which one or more physicians practice medicine.

Transactions Covered

A hospital or hospitals must give notice for any transaction in which it is a party and will acquire – meaning own or control the business of – a medical practice.

Notice Period

The hospital or hospitals must provide notice to the AG 90 days before the effective date of the transaction or as soon as practicable.

Notice Contents

The hospital or hospitals should provide the names, addresses and contact information for all transacting parties.

Review Period

There is no explicit review period that the AG must abide by after receiving notice. The AG may or may not use the information provided with the parties'' notice to perform an inquiry into potentially anticompetitive practices.

Effective Date

Currently effective.

Washington

Washington requires all parties to a transaction to give the Attorney General (AG) at least 60 days' written notice before the effective date of any transaction that would result in a material change to a hospital, hospital system or provider organization.¹⁵

Who Must File

All parties to a transaction that results in a material change to a hospital, hospital system or provider organization. A hospital means any institution, place, building or agency that provides accommodations, facilities and services over a continuous period of 24 hours or more for observation, diagnosis or care of two or more individuals. A hospital system is a group of hospitals. A provider organization is any entity in the business of healthcare delivery or management and that represents seven or more healthcare providers in contracting with carriers or third-party administrators for the payments of healthcare services. A provider organization includes physician organizations, physician-hospital organizations, independent practice associations, provider networks and accountable care organizations.

Transactions Covered

A transaction is covered if it would result in a material change to a hospital, hospital system or provider organization. A material change includes a merger, acquisition or contracting affiliation between two or more of the following entities: hospitals, hospital systems or provider organizations. A transaction that otherwise qualifies as a material transaction will be covered and subject to notice requirements if the transaction is between a Washington and an out-of-state entity as long as the out-of-state entity generates $10 million or more in revenue from patients residing in Washington.

Notice Period

Transacting parties must give the AG 60 days' notice before the covered transaction's effective date.

Notice Contents

The notice must include the names and addresses of all the parties, identify the locations where healthcare services are currently provided by each party, a brief description of the nature and purpose of the proposed material change, and the anticipated effective date of the proposed change. If the transacting parties have also filed a federal HSR filing, the parties must also send a copy of the filing to the AG.

Review Period

The AG may request additional information from the parties within 30 days of receiving notice. There is not an explicit timeline for the AG to review the transaction. If the AG does not request additional information within 30 days, the AG may still, at a later date, initiate an investigation or file a lawsuit challenging the transaction.

Effective Status

Currently effective.

Footnotes

1. This article does not discuss states that have notification or approval requirements only for transactions involving nonprofit entities, which may or may not include healthcare entities. These states include Arizona, Delaware, Idaho, Louisiana and Maryland.

2. See Cal. Health & Saf. Code §§ 127500 et seq.

3. See Cal. Office of Health Care Affordability, CMIR Regulations for Workshop (July 27, 2023) (OHCA Proposed Rules).

4. See Colo. Rev. Stat. §§ 6-19-101 et seq.

5. See Conn. Gen. Stat. §§ 19a-486i et seq.

6. See Haw. Rev. Stat. Ann. §§ 323D-71 et seq.

7. See Ill. Pub. Act 103-0526 § 99 (to be codified as 740 Ill. Comp. Stat. 10/7.2a).

8. See Mass. Gen. Laws ch. 6D § 13.

9. See Minn. Stat. Ann. § 145D.01‒.02.

10. See Nev. Rev. Stat. §§ 598A.290 et seq.

11. See NY Pub. Health L. §§ 4550 et seq.

12. See Or. Rev. Stat. §§ 415.500 et seq.

13. See 23 R.I. Gen. Laws Ann. § 23-17.14-7.

14. See 18 Vt. Stat. Ann. §§ 9405c et seq.

15. See Wash. Rev. Code §§ 19.390.010 et seq.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.