On March 5, 2025, two Senators and one Representative introduced SB 25-198 (the Bill), designed to enhance transparency in transactions involving health care entities. The Bill seeks to impose notification and reporting requirements on mergers, acquisitions, and affiliations that materially change the ownership, operations, or governance structure of health care entities, long-term care entities, and veterinary care entities.
Legislative Background and Evolution of SB 25-198
The Bill reflects a growing national trend toward heightened scrutiny of health care consolidation and its impact on competition, patient access, and pricing. Before the Bill's formal introduction, discussions were held between the Attorney General's Office, Bill sponsors, and various stakeholders from the health care industry. These discussions prompted certain technical changes to the informally circulated draft of the Bill but were largely unsuccessful in derailing its introduction.
Definitions
Health care entities are broadly defined to include any entities that provide services relating to the prevention, cure, or treatment of an illness, injury, condition, or disease, including medical, surgical, chiropractic, hospital, optometric, podiatric, dental, pharmaceutical, ambulance, mental health, substance use disorder, therapeutic, preventive, diagnostic, curative, rehabilitative, and palliative services.
Long-term care entities are defined as any entities that provide services and support to members of all ages with functional limitations and chronic illnesses who need assistance to perform routine daily activities.
Increased Oversight
The Bill would significantly increase regulatory oversight by:
- Requiring parties to material change transactions (defined below) to submit a notice to the Attorney General at least 60 days before the transaction's effective date.
- Increasing financial reporting obligations for transactions involving entities having aggregate annual revenue in excess of US$80 million.
- Allowing the Attorney General to assess whether a proposed transaction is contrary to the public interest and take action to enjoin or unwind transactions deemed harmful.
- Granting the Attorney General authority to convert a transaction review into an antitrust investigation.
Reporting Requirements
The Bill defines a reportable "material change transaction" to include mergers, acquisitions, and certain contractual affiliations that alter ownership, governance, or operational control.
Financial thresholds dictate the levels of notice requirements:
- Transactions involving an entity with an average annual revenue of at least US$80 million, or those projected to result in an entity with such revenue, are subject to the most extensive disclosure obligations.
- Transactions involving an entity with an average annual revenue of at least US$30 million, or those projected to result in an entity with such revenue, have reduced, but still significant, notice requirements.
- Transactions below US$30 million are still subject to basic disclosure obligations.
The Bill also would impose reporting obligations for ongoing post-transaction monitoring. For five years post-transaction, entities would be required to submit annual reports to the Attorney General detailing compliance with any conditions imposed by the Attorney General in approving the transaction.
The Road Ahead: Where SB 25-198 Stands in the Legislative Process
Since its introduction, the Bill has been assigned to the Health & Human Services Committee, where it will undergo initial hearings and potential amendments. If the Bill passes out of the committee, it will move to the Senate floor before heading to the House of Representatives for further consideration. Amendments may be introduced at multiple stages, meaning the final version could differ from the current public text.
Takeaways
SB 25-198 would represent a major shift in regulatory oversight for health care transactions in the State of Colorado. By increasing reporting requirements, the Bill aims to enhance transparency in reporting and prevent consolidation in the health care market. However, its potential compliance burdens, costs, and delaying effect on transactions raise concerns for health care providers and their investors and stakeholders.
Foley is here to help you navigate the evolving legal landscape. Our team of health care and corporate attorneys is closely tracking SB 25-198 and can assist with compliance planning, transaction structuring, and regulatory risk assessment.
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.
