Health Care Transactions

In August 2023, we published a blog post about the California Office of Health Care Access and Information’s (“OHCA”) proposed cost and market impact review (“CMIR”) regulations under the California Health Care Quality and Affordability Act (“Proposed Regulations”). The final CMIR regulations implementing the notice requirements for large health care transactions in California (“Final Regulations”) were approved on December 18, 2023. As enacted, all health care entities that meet certain threshold requirements and are a party to a “material change transaction” expected to close on or after April 1, 2024, must provide at least 90 days’ advance notice to OHCA. OHCA began accepting notices as of January 1.

Continuing the trend towards greater scrutiny of health care transactions, on February 16, the California Assembly introduced a new bill, AB-3129, which would subject private equity groups and hedge funds to a 90-day notice and consent requirement for change of control transactions or acquisitions of health care facilities or provider groups that are expected to close on or after January 1, 2025. While the Final Regulations are intended to promote competition in the health care sector, the stated purpose of AB‑3129 is to improve the quality and lower the cost of health care.

This blog discusses the scope of the Final Regulations and what to look out for as AB-3129 makes its way through the California legislative process. 

Update as of 3/13/24:

House Bill 4130 died on March 4, 2024, after it failed to reach the Senate Floor. Representative Ben Bowman, the Bill’s chief sponsor, pledged to reintroduce the Bill as soon as the opportunity arises. The Bill garnered national attention as the latest state-led effort to regulate

Following New York State Governor Kathy Hochul’s proposal in February of this year (see our previous alert), the New York legislature passed and Governor Hochul signed a law on May 3, 2023, which significantly increases the state’s focus and visibility into physician practice management change‑of‑control transactions.[1] New York’s statute reflects a growing trend of states taking note of transactions that previously were not regulated by state administrative agencies. As we await the promulgation of regulations from the New York State Department of Health (“DOH”), we examine here how New York’s law compares to similar laws in other states, and describe precautions that operators in the physician management space — as well as those who do businesses with such operators — should take to safeguard themselves against major disruptions to operations.

On July 27, 2023, California’s Office of Health Care Access and Information (the “Office”) released its long-awaited proposed regulations on the notice requirements for material health care transactions in California. The anticipated regulations follow the passing of SB 184 on June 30, 2022, which, in part, created the Office and granted it the authority to collect and analyze data related to health care costs, specifically via monitoring mergers and acquisitions in the health care industry. Following the lead of states like New York, whose wide-range health care transaction requirements were discussed in a previous blog post, California seeks to address the increasing costs of health care services by imposing significant notice and review requirements for mergers and acquisitions beginning in 2024.