As the year begins under a new Trump Administration, healthcare providers and private equity firms should consider the antitrust enforcement environment they are likely to face in 2025. This Holland & Knight report recaps many of the developments in antitrust at both the federal and state levels in 2024 and looks ahead into 2025. Holland & Knight's Antitrust Team and Healthcare Transactions Team welcome the opportunity to discuss any of these issues and the impact they might have on your business in the new year.
2024 Year in Review: Federal Antitrust
HSR Updates
The Federal Trade Commission (FTC) is required under the Clayton Act to revise the Hart-Scott-Rodino Antitrust Improvements Act (HSR) thresholds annually based on changes in the gross national product. The HSR revisions, which took effect on March 6, 2024, kept the six-tiered HSR transaction value and filing fee structure, which replaced the three-tiered structure in 2023. Both the transaction value and filing fees have increased by approximately 7.3 percent over the 2023 thresholds. On Jan. 10, 2025, the FTC announced revised HSR thresholds, which tentatively go into effect on Feb. 21, 2025.
On Oct. 10, 2024, the FTC unanimously approved substantial amendments to the HSR antitrust rules (Final Rule) that will increase filers' costs and burdens. The Final Rule significantly broadens the universe of information and documentation that must be reported – including, but not limited to, overlapping business lines, ownership structure and a deal's rationale. In fact, the FTC estimates that HSR filings under the Final Rule will now take on average 68 to 121 hours to prepare, a stark increase from the current average of 37 hours. The Final Rule was expected to take effect in February 2025. However, on Jan. 20, 2025, President Donald Trump signed an Executive Order, titled Regulatory Freeze Pending Review, that signals to agencies, including the FTC, to postpone by 60 days the effective date of rules already published in the Federal Register, such as the HSR Final Rule. As part of the 60-day postponement, the Executive Order directs agencies, where appropriate, to consider opening a comment period to allow interested parties to provide additional input about issues of fact, law and policy raised by the postponed rules.
Even before the issuance of the Executive Order, several business groups led by the U.S. Chamber of Commerce sued the FTC on Jan. 10, 2025, in the U.S. District Court for the Eastern District of Texas to block the HSR Final Rule from going into effect. The lawsuit alleges that the FTC's Final Rule violates the Administrative Procedure Act by, in part, exceeding the FTC's statutory authority in promulgating a costly and burdensome rule. The case, Chamber of Commerce of the United States of America v. Federal Trade Commission, Case No. 6:24-cv-00009, is assigned to District Judge Jeremy D. Kernodle.
Given all of these developments, the status of the HSR Final Rule is in flux, and Holland & Knight's Antitrust Team is closely monitoring the situation. We are available to discuss the Final Rule's status and to advise stakeholders that wish to submit comments on it.
Additional Resources
Private Equity Roll-Ups and Enforcement
In 2024, the FTC and U.S. Department of Justice (DOJ) reaffirmed their focus on private equity and its influence on the healthcare industry. Nevertheless, that focus was not always successful. On May 13, 2024, in a federal case, the U.S. District Court for the Southern District of Texas dismissed all claims against Welsh, Carson, Anderson & Stowe (Welsh Carson) in the FTC's lawsuit challenging one of its portfolio company's so-called "roll-up" strategy to consolidate anesthesiology practices in Texas. The dismissal of Welsh Caron confirmed that Section 13(b) of the FTC Act should not expand antitrust liability to reach minority investors in subsidiary companies.
As discussed in Holland & Knight's previous alert, "Private Equity Firm Welsh Carson Dismissed from FTC Antitrust Action," May 15, 2024, Section 13(b) of the FTC Act, 15 U.S.C. Section 53(b), addresses a specific problem, namely that of stopping seemingly unfair practices while the FTC determines their lawfulness through its own administrative proceedings. On Jan. 17, 2025, the FTC announced a settlement with Welsh Carson resolving a potential administrative antitrust case that would have been separate from the already pending lawsuit filed in federal court. As part of the Proposed Order (Order) resolving the administrative case, Welsh Carson agreed to 1) limit its ongoing ownership rights in its portfolio company and reduce its membership on the operating company's board of directors to a single, non-chairperson seat, 2) obtain prior approval from the FTC for any future investments in anesthesia nationwide and 3) provide the FTC with 30 days' advance notice for certain transactions involving hospital-based physician practices nationwide. Additionally, Welsh Carson is subject to ongoing compliance reporting, including 1) an interim compliance report 60 days from the date the Order is issued, 2) an annual compliance report for the next 10 years and 3) additional compliance reports as the FTC or its staff may request.
Another example of the focus on private equity in healthcare is the Senate Budget Committee's recent report titled "Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System." The report detailed findings regarding private equity's impact on 1) quality of care, 2) patient safety and 3) financial stability at hospitals across the U.S. The report thus continues the ongoing debate about the benefits that private equity provides in the healthcare industry.
Another notable report was issued on Jan. 15, 2025, in response to a joint Request for Information (RFI) issued by the FTC, DOJ and U.S. Department of Health & Human Services (HHS) in March 2024. The RFI focused on Consolidation in Health Care Markets, and the report echoes many of the same findings found in the Senate Budget Committee's report.
Although the focus on private equity may not be as acute under the Trump Administration, it is not expected to completely vanish in 2025. The focus on private equity over the next four years will likely be similar to other forms of investment and ownership in the healthcare industry – at least on the federal level. As noted by FTC Commissioner Andrew Ferguson, the new FTC chair, in a concurring statement in the Welsh Carson settlement, "[t]here is [ ] no reason for the Commission to single out private equity for special treatment." Instead, expect federal enforcers to subject private equity to more "routine law-enforcement matter[s] embodying a traditional approach to competition law." This approach is similar to what Holland & Knight noted after its October 2024 healthcare panel with FTC and DOJ experts. As explained below, however, enforcement at the state level may be much more active.
Additional Resources
Non-Compete Agreements
With respect to non-compete agreements, 2024 started with a bang and ended with a whimper. On April 23, 2024, the FTC issued a rule banning new non-compete agreements in all employment contexts. The new rule applied to anyone – other than certain senior executives – working at a for-profit employer, whether paid or unpaid, and to independent contractors. But on July 3, 2024, the U.S. District Court for the Northern District of Texas issued a preliminary injunction enjoining the FTC from enforcing its new rule. The court then turned to the merits of the dispute and, on Aug. 20, 2024, granted summary judgment in favor of the plaintiffs challenging the rule, finding that the FTC lacked authority to make substantive rules regulating unfair competition and that the rule was arbitrary and capricious. The court's ruling is currently on appeal, but in the meantime, the rule has been blocked on a nationwide basis for all employers.
Undeterred by the results of the Ryan case and the November 2024 election, the FTC and DOJ on Jan. 16, 2025, issued new FTC-DOJ Antitrust Guidelines for Business Activities Affecting Workers. The guidelines reiterate that non-compete clauses can violate antitrust and other laws but acknowledge that the federal court set aside the FTC's rule and that the decision is on appeal. The guidelines also emphasize that the FTC retains the legal authority to address non-competes on a case-by-case basis via enforcement of the FTC Act. However, it is unlikely that the new FTC Chair and the soon-to-be Republican majority of FTC commissioners will have the same appetite for the types of rules and labor market enforcement actions seen over the past four years.
Additional Resources
- "New FTC Rule Bans Non-Compete Agreements in All Employment Contracts," Holland & Knight alert (April 23, 2024)
- "FTC Bans Non-Competes: Takeaways and Action Items for Healthcare Provider CEOs and Investors," Holland & Knight alert (April 26, 2024)
- "District Court Issues Injunction Prohibiting Enforcement of FTC Non-Compete Ban," Holland & Knight alert (July 5, 2024)
- "District Court in Texas Sets Aside FTC Non-Compete Rule," Holland & Knight alert (Aug. 21, 2024)
- "DOJ, FTC Issue New Antitrust Guidelines on Business Practices Impacting Workers," Holland & Knight alert (Jan. 21, 2025)
Mergers
As noted in Holland & Knight earlier alerts, the FTC and DOJ in December 2023 jointly announced the release of final Merger Guidelines (Guidelines) that significantly expanded the number and types of transactions subject to antitrust challenge. The Guidelines advance the view of the FTC and DOJ that prevailing approaches to merger review have been too permissive and not up to the task of identifying and preventing transactions that harm consumers and workers. Although the FTC and DOJ have had some success convincing courts to follow at least some parts of the Guidelines, their future remains unclear in the Trump Administration. Holland & Knight's Antitrust Team is continuing to monitor new developments in the merger area, and companies should do likewise.
Additional Resources
2024 Year in Review: State Antitrust
At the state level, transaction reporting laws faced stiff headwinds throughout 2024, with several failed bills, most notably California's A.B. 3129 vetoed by Gov. Gavin Newsom. However, there was a flurry of activity in late 2024 for the new legislative sessions that saw several bills proposed and, in one case, enacted in Massachusetts. Accordingly, for the rest of 2025, it is anticipated that healthcare transactions will remain a hotbed of state legislative and regulatory activity, with states taking the following approaches: 1) a narrow focus on transaction types or healthcare entities that address a specific outcome, cost or other trend in the state, 2) a codification of corporate practice of medicine (CPOM) restrictions and/or 3) specific scrutiny of private equity, real estate investment trust (REIT) and related acquisition models.1
California. 2024 was a monumental year for healthcare transaction legislation and rulemaking in California. As previously reported, California's existing law and regulations took effect on Jan. 1, 2024 (see Holland & Knight's previous alert, "Baby HSRs: States Are Modeling Laws After Federal Act to Investigate More Transactions," Oct. 2, 2023). Then midyear, California's Office of Health Care Affordability (OHCA) updated its regulations to capture more transactions (see Holland & Knight's previous alert, "California Ends the Legislative Session with Expanded Reporting Requirements, Less Clarity," Sept. 12, 2024). Since Jan. 1, 2024, 11 transactions have been reported to OHCA, and no California cost and market impact reviews (CMIR) have been required to date. Four of the 11 are still under review (see Holland & Knight's previous alert, "5 Key Takeaways from Panel Discussion with the California Office of Health Care Affordability," Nov. 11, 2024, for a recap of how to get deals done in California).
A separate reporting law, A.B. 3129, would have required attorney general (AG) approval for private equity transactions and codified CPOM restrictions. However, the industry had a significant role in the legislative process with the measure making national news. Ultimately, Newsom vetoed the legislation, citing the additional review requirement to be redundant with OHCA's existing law (see Holland & Knight's previous alert, "California Governor Vetoes Assembly Bill 3129: What's Next?," Oct. 1, 2024).
Post-veto of A.B. 3129, California's Senate introduced S.B. 25 that would require parties with a California nexus to submit a full copy of a HSR filing to the California AG. This requirement would apply if one of the parties has its principal place of business in California or has annual net sales (related to the transaction) of at least 20 percent of the HSR filing threshold. It remains to be seen whether the law will be passed. Regardless, this type of bill could be a path of least resistance for state legislatures looking to review more transactions without creating specific roadblocks that could temper investment.
Connecticut. Connecticut has been active in January 2025, exploring four bills that propose restrictions for private equity and REIT activity in various healthcare facilities and transactions. There is a fourth bill that allows the state to appoint a receiver for a hospital or assume control of a hospital in the event of financial distress. Moreover, Gov. Lamont recently announced his 2025 Legislative Proposal that will be released soon and will include an expanded healthcare transaction reporting statute, the establishment of an agency that will review healthcare transactions and an approval right on certain transactions for the Office of the Attorney General. It remains to be seen which bill will proceed, since attempts to update existing law in 2024 failed (see Holland & Knight's previous alert, "Healthcare Private Equity Transactions Under Scrutiny: Midyear Review," Aug. 1, 2024). What is apparent though is that Connecticut is following in the footsteps of its New England neighbor, Massachusetts.
- H.B. No. 6570, An Act Prohibiting a Private Equity Firm from Acquiring, Owning or Controlling a Health Care Provider's Practice or Health Care Facility and Requiring the Disclosure of a Change in Ownership of Such a Practice or Facility. The proposed bill includes a broad prohibition on private equity firms owning or controlling a healthcare provider's practice or facility. There would also be ownership disclosure requirements and enforcement rights held by the Attorney General.
- B. No. 261, An Act Limiting the Ability of Private Equity Firms to Purchase Health Care Facilities. The proposed bill designates an amendment of the state's statutes to "impose restrictions on private equity firms buying, operating or holding a controlling interest in hospitals" including restricting real estate leasebacks and preventing CPOM concerns.
- B. No. 469, An Act Restricting the Acquisition of Hospitals by Private Equity Firms, Prohibiting Real Estate Investment Trust Transactions Involving Hospitals and Establishing Physician-Led Ownership Requirements for Medical Groups and Ambulatory Surgery Centers. The proposed bill would restrict private equity firms from acquiring hospitals, prohibit REITs from hospital transactions and establish physician-ownership requirements for medical groups and ambulatory surgery centers.
- B. No. 567, An Act Concerning the Regulation of Private Equity Ownership of Hospitals, Radiology Groups and Drug Rehabilitation Facilities. The proposed bill would expand the state AG and Commissioner of Health Strategy's powers to regulate private equity ownership of hospitals, radiology groups and drug rehabilitation facilities, as well as restrict "self-dealing" property transactions.
- B. No. 767, An Act Concerning the Appointment of a Receiver and the Exercise of Eminent Domain to Ensure the Continuity of Health Care Services in Hospitals Facing Financial Distress or an Operational Crisis. This proposed bill would allow the attorney general to petition the court to appoint a receiver for a hospital or the state to exercise eminent domain to assume control of a hospital at a risk of closure due to financial instability.
Indiana. On July 1, 2024, Indiana's healthcare transaction reporting law took effect and, for most of the year, was the only successful state healthcare transaction law to be proposed and passed. As previously reported by Holland & Knight, the law broadly requires many types of healthcare transactions involving entities with total assets of at least $10 million to notify the Indiana AG at least 90 days before closing a transaction. However, as transactions have been reported, several questions have been arisen that require clarification from the Indiana attorney general – in particular, how the law is applied to transactions involving management service organizations and their supported practices.
Additionally, on Jan. 13, 2025, the Indiana Senate introduced S.B. 370 that would, in pertinent part, require hospitals to notify the attorney general at least 90 days before merging with or acquiring an independent physician practice that provides outpatient services. If enacted in its current form, it is unclear how this law would interact with the existing reporting statute and whether two separate filings could be required for a transaction that meets the respective criteria.
Finally, as Holland & Knight previously reported, Indiana's new governor, Mike Braun, previewed that a key health policy initiative for his administration would be building a regulatory framework that requires any private equity merger or acquisition in the healthcare industry to be approved by the attorney general, regardless of valuation. To that end, on Jan. 21, 2025, the Indiana House introduced H.B. 1666, which, among other things, amends Indiana's existing reporting law to implement Braun's platform. Starting July 1, 2025, the Indiana attorney general would have 45 days to approve or deny reported healthcare mergers or acquisitions of healthcare entities involving private equity owners. The attorney general would be able to deny such a transaction if it determined there would be "adverse" financial impacts or healthcare outcomes for Indiana healthcare consumers.
H.B. 1666 also seeks to enhance transparency for the ownership of healthcare and insurance businesses (including by private equity sponsors) requiring physician group practices, hospitals, insurers, third-party administrators and pharmacy benefit managers to report certain ownership information. Notably, these entities would need to disclose owners with stakes of more than 5 percent and private equity partners to the state department or face penalties of varying amounts, based on size of entity, for each day a report is past due.
Stakeholders should closely monitor the progress of H.B. 1666 and any follow-on legislation. On its face, H.B. 1666 could be criticized, similar to A.B. 3129, as redundant with Indiana's existing reporting statute. However, this bill is a direct extension of the governor's healthcare plan, suggesting that it may be passed quickly. State legislators may be able to use H.B. 1666 to also address some of the inconsistencies and open questions regarding the existing law.
Massachusetts. Since 2015, transaction reporting obligations in Massachusetts have focused on market-consolidating transactions and provider-to-provider transactions. For this reason, these obligations captured several transactions within Massachusetts but often did not raise significant concerns for large national healthcare platform deals.
As with other states, and Holland & Knight previously reported, the Massachusetts legislature considered expansions to the Commonwealth's existing reporting law but could not agree on the path forward for its framework for much of 2024. It was not until the last days of the year that the legislature passed H.5159 and Gov. Maura Healey signed it into law on Jan. 8, 2025.
H.5159, unlike A.B. 3129 and certain other failed bills from 2024, does not create a redundant reporting framework, nor does it expand or enhance Massachusetts' CPOM doctrine. Instead, it expands the Commonwealth's existing reporting obligations to increase transparency of subject healthcare entities and transactions and takes specific aim at private equity investments. It raises questions: Why was Massachusetts able to quickly impose greater oversight of private equity in early 2025, while California and other states failed the previous year? Why did the industry not react the same way as it did in California? Perhaps the reasons are in the following details:
1. Expands Transaction Reporting Requirements and Targets Certain Private Equity Investments
H.5159 broadens the existing 60-day transaction reporting framework to include 1) significant expansions in a provider or provider organization's capacity, 2) transactions involving "significant equity investors" resulting in a change of ownership or control of a provider, provider organization or carrier (but "change of ownership or control" is currently undefined), 3) significant acquisitions, sales or transfers of assets, including real-estate sale-leaseback arrangements,2 and 4) conversions of nonprofit providers/provider organizations into for-profit entities. Massachusetts Health Policy Commission (HPC) regulations, if promulgated, could define and clarify some of the undefined terms in the new prongs, but for the moment, many questions remain about the breadth and applicability of the amended law.
It is also important to note that a "significant equity investor" means any private equity company with a financial interest in a provider, provider organization or management services organization (MSO), or any investor or group of investors with direct or indirect ownership of 10 percent or more of a provider, provider organization or MSO. However, venture capital funds are excluded from this definition. If a transaction must be reported involving a significant equity investor, HPC is now authorized to request information about a significant equity investor's capital structure, general financial condition, ownership and management structure, and audited financial statements.
Additionally, H.5159 also defines, for the first time, "management services organizations" as corporations that provide management or administrative services to a provider or provider organization for compensation. Interestingly, however, MSOs, are not expressly included in H. 5159's expanded framework of reportable transactions, nor did the legislature include an updated definition of "provider organization." This raises the question of whether the legislature agrees with prior HPC guidance indicating that certain MSOs can be considered "provider organizations" depending on the payer support services provided to providers.
Furthermore, HPC is now authorized to conduct post-transaction monitoring of the parties, and to request additional information, for up to five years after the transaction closes. This is a significant expansion of HPC's authority to study the effects of healthcare consolidation in Massachusetts and appears to align with Oregon's existing law.
2. Ongoing Reporting and Monitoring Obligations Expanded to Include Private Equity and REIT Affiliations
Prior to H.5159, HPC's annual public hearings saw providers, provider organizations and payers deliver reports and testimony on the cost, prices and cost trends of healthcare in the Commonwealth (see the 2024 Cost Trends Hearing). H.5159 significantly expanded the entities required to deliver testimony and reports to now include significant equity investors, REITs, MSOs, pharmaceutical manufactures and pharmacy benefit managers.
Significant equity investors, REITS and MSOs must deliver testimony on, among other topics: health outcomes, prices charged to insurers and patients, financial stability and ownership structure of an associated provider or provider organization, dividends paid out to investors and compensation including, but not limited to, base salaries, incentives, bonuses, stock options, deferred compensations, benefits and contingent payments to officers, managers and directors. Testimony at the annual hearing is delivered under oath and penalty of perjury, and the HPC has the authority to compel such testimony.
Additionally, providers and provider organizations subject to the Commonwealth's Center for Health Information and Analysis (CHIA) reporting obligations must, under H.5159, include in their annual financial statements information about any affiliated significant equity investors, REITS and MSOs. Penalties for failing to report may be up to $25,000 per week (up from $1,000 before H.5159) for each week of delay following written notice from CHIA of a missed reporting deadline.
Stakeholders in the Commonwealth are encouraged to reassess, under H.B. 5159's new requirements, whether they may be subject to the HPC's testimony requirements and/or CHIA's reporting obligations.
3. Expands False Claims Act Liability to Private Equity Investors and Other Owners
H.5159 amended the Attorney General's Office (AGO) False Claims (FCA) statute to now apply to owners of healthcare entities with 10 percent or more direct or indirect ownership, including private equity owners. Such owner could be liable under FCA if it is engaging in, or becomes aware of, any FCA violation and fails to address the violation in a timely manner. This liability attaches regardless of whether such owner caused the violation. Accordingly, expect healthcare entities and their owners to consider whether changes are necessary to organizational structures and compliance programs. This enforcement and liability strategy is similar to failed federal legislation from 2024 (see Holland & Knight's previous alert, "Healthcare Private Equity Transactions Under Scrutiny: Midyear Review," Aug. 1, 2024) that would have made certain private equity sponsors and healthcare executives liable if actions attributable to them caused harm.
On Jan. 17, 2025, state legislators filed S.D.1910 that would enhance healthcare market oversight and pharmaceutical access. Included in the provisions are restrictions on private equity acquiring a provider or provider organization if the transaction had a reasonable likelihood of causing or materially contributing to the provider or provider organization's financial distress as as result of placing an excessively high level of debt on the provider or provider organization. Private equity would also be restricted from leading the provider or provider organization 1) to issue debt-funded dividends, 2) pay to the private equity company management fees or similar cost, or 3) issue dividends that would have a reasonable likelihood of causing the provider or provider organization to become financially distressed. There would be similar restrictions for REITs. The bill further requires the private equity company to deposit a bond with the department that equals one year of the provider or provider organization's average or estimated operating expenses, plus the estimated cost of hiring an supervisor or staff. The bond would be held for the duration of ownership and for seven years thereafter.
Minnesota. As previously reported, Minnesota's legislature in February 2024 proposed a sweeping prohibition on all private equity and REIT acquisitions of or investments in healthcare providers. The bill died in committee, but stakeholders should watch Minnesota closely for a resurgence of a similar bill during the 2025-2026 legislative session.
New Mexico. On Jan. 21, 2025, New Mexico proposed a healthcare transaction reporting statute that requires 60-day notice with the possibility of a CMIR being required. If a CMIR were to be required, the parties would need to obtain written approval with or without conditions. The focus would be on transactions involving one or more New Mexico hospitals, healthcare entities with an average annual revenue of $40 million and new healthcare entities with a projected average annual revenue of $20 million. The definition of "healthcare entities" would be one of the broadest in the country that includes out-of-state telemedicine providers and dental service organizations. Moreover, there would be disclosure requirements including ownership transparency with an emphasis on private equity investors and management service organization affiliations. Similar to Oregon and other states, transaction notices and certain documents would be posted on public websites and in some cases there may be public hearings. This law would go into effect in July 2025.
New York. On Jan. 21, 2025, Gov. Kathy Hochul introduced legislation in the proposed fiscal year (FY) 2025-2026 New York State Executive Budget (the Budget) that would amend the state's existing healthcare transaction reporting statute that has been in effect for nearly two years. If enacted, this measure would increase the reporting timeframe from 30 days to 60 days – with a potentially longer period if the New York State Department of Health (DOH) requires a CMIR – as well as impose additional disclosure obligations related to whether the parties involved have closed, are in the process of closing or have substantially reduced services of healthcare operations in the past three years, identify any sale-leaseback agreement and require reporting on impacts to cost, quality, access, health equity and competition for five years post-closing. Though most information would be considered confidential, certain reported data could be used as evidence in investigations, reviews and/or other actions by DOH, OAG and other New York State agencies. Costs of the review could be imposed on the parties by DOH. Though these changes do not add a consent right or expand the net of transactions that are captured, it would still be a significant change and questions remain regarding DOH's interpretation of several definitions of the existing law since there have no regulations or other guidance published to date. Moreover, since August 2023, there have only been nine reported transactions. It remains to be seen what the New York legislature will do with these provisions in the Budget that needs to be signed into law by April 1, 2025. For a more detailed analysis, see Holland & Knight's previous blog, "Proposed Changes to New York's Material Transactions Law Expand Oversight," Jan. 24, 2025.
Oregon. In May 2024, Oregon's existing transaction reporting law survived its first serious challenge when a district court judge dismissed a lawsuit from an Oregon-based hospital association challenging the validity of the law for vagueness. An appeal is now pending. Otherwise, the Oregon Health Authority (OHA) has been busy, reviewing 44 transactions, five of which were subject to a comprehensive review (i.e., CMIR).
As previously reported, regulators in 2024 tried to pass a CPOM expansion bill and failed. Expect a revised version to return in 2025 that may strengthen Oregon's CPOM prohibitions, prohibit MSOs from controlling medical practices and void certain restrictive covenants. However, the necessity and likelihood of success of such a CPOM bill is an open question given its potential redundancy. Oregon has had a robust common-law CPOM doctrine for nearly 80 years. Any new bill would also arguably be redundant with OHA's authority to review transactions – notably, OHA has specifically looked for corporate practice of dentistry issues in prior reported transactions and has not found any issues to date.
Pennsylvania. As previously reported, three different healthcare transaction review laws were pending in Pennsylvania in 2024, each of which targeted a different sector of the healthcare industry. These coincided with a significant action against a health system by the state AG. Of the three laws, only one – H.B. 2012 (Pennsylvania Open Markets Act) – appeared to have momentum since it was limited to oversight of transactions between healthcare systems, healthcare facilities and certain provider organizations. This bill (which would be the first framework for the state) focused on the specific issues that the state was grappling rather than seeking to capture all healthcare transactions. The Pennsylvania legislature has signaled it will be reintroduced in 2025.
South Carolina. In mid-December 2024, state legislators pre-filed S. 0046 that would codify, for the first time, a CPOM prohibition in South Carolina (which currently has a common law CPOM prohibition). The bill declares CPOM to be against the public policy of the state and prohibits any unlicensed entity from practicing medicine. Additionally, the bill would prohibit the majority of physician-practice non-competes in the employment context but preserves the validity of non-competes in connection with a sale of a physician's practice (as long as the non-compete duration is less than five years).
Texas. In mid-November, state legislators pre-filed H.B. 985 that would require hospitals to notify the Texas AG and Texas Health and Human Services Commission when acquiring any outpatient healthcare facilities. The bill does not specify a notice period, nor whether notice must come before the acquisition or after closing. The bill also would require uniform Medicaid reimbursement rates for both hospital-owned outpatient facilities and physician-owned outpatient facilities (i.e., "site-neutral reimbursement").
Vermont. On Jan. 23, 2025, state legislators proposed H.B. 71 that would require healthcare entities to report transactions to the green Mountain Care Board and attorney general prior to entering into them and would direct the board to have an approval right (with or without conditions) on certain transactions. The bill would also prohibit corporations from practicing medicine and require public reporting on the ownership and control of healthcare entities. The CPOM restrictions go beyond what A.B. 3129 tried to do in California by prohibiting the use of stock transfer restriction agreements, limiting physician ownership in management service organizations and prohibiting many forms of restrictive covenants. If passed, the law would take effect on July 1, 2025.
Washington. In mid-December 2024, state legislators pre-filed H.B. 1072 that would update existing law to subject a new category of Washington healthcare providers to reporting requirements and require preapproval of those transactions. The bill requires any provider organization, hospital, health system or carrier providing gender-affirming care, end-of-life care or reproductive care (collectively, "protected health services") to notify the Washington Department of Health (DOH) at least 60-days before any transaction that may affect access to the protected health services. The transaction must then be approved by Washington DOH.
As previously reported, the Washington legislature in 2024 tried and failed to expand the state's existing transaction reporting law. A revised version of the failed legislation may return in 2025, but like A.B. 3129 and Oregon's failed 2024 legislation, Washington's bill could face pushback from the industry as a redundant measure that's not needed given Washington's existing framework. Separately, there may be a draft CPOM bill under consideration by the Washington legislature that would enhance Washington's existing CPOM prohibition. Stakeholders should monitor Washington closely for potential expansions of its transaction reporting requirements and CPOM prohibitions.
Notes
1 We understand that legislators in North Carolina are considering bills to be proposed in 2025.
2 "Significant acquisition" is undefined, and there are no thresholds set for a "sale or transfer of assets."
