Healthcare And Private Equity Transactions Continue To Be Under State Scrutiny

Key Takeaways:

• State laws governing healthcare transactions are changing quickly. Legislation may have been introduced in a state in which you are contemplating a transaction or that otherwise impacts your organization. Stay current. Remain vigilant. Monitor developments.
• Transactions involving private equity firms continue to be under the microscope, and legislation may also address transactions involving MSOs. If legislation is proposed or ultimately becomes law, it is important to understand which healthcare organizations are impacted, whether transactions involving private equity or MSOs must be disclosed, exclusions or materiality thresholds, state agency involvement, and what your obligations are for reporting or potentially obtaining state approval.
• As state agencies and AGs continue to scrutinize these transactions, the conditions placed on approval of a transaction may continue to evolve and expand. Parties should consider the impact of potential approval conditions in structuring a transaction's timing, terms, and total cost.

Healthcare consolidation continues to accelerate, driven by private equity, large health system acquisitions and expanding cross‑state provider networks. State legislatures are responding with increasingly intensive regulatory frameworks. There have been significant developments since our last Client Alert tracking state legislation. This Client Alert highlights state legislation enacted in 2025 that has become law as well as proposals to date in 2026.

A defining theme across state legislation is bolstering the authority of the state attorney general (AG) over healthcare transactions, treating private equity ownership structures and market expansion as triggers for heightened review. Impacted clients should expect to see longer timelines for approval, more burdensome disclosure requirements and greater transparency expectations. This may include enhanced coordination and communication between regulators, both within different state agencies and across states.

While states may include different nuances impacting transactions under their jurisdiction, they also continue to reference model laws to guide legislative drafting. In 2024, the National Academy for State Health Policy (NASHP) published its Comprehensive Consolidation Model Addressing Transaction Oversight, Corporate Practice of Medicine and Transparency. The NASHP's model law focuses on enhanced transparency requirements, transaction review and input from the public. Some states rely heavily on the NASHP's model law to mold their definitions, frameworks and enforcement mechanisms.

States with Legislation Enacted or Effective in 2025

California

California's AB 1415 expands the Office of Health Care Affordability's authority to review healthcare transactions. The law extends notice requirements to covered transactions involving management services organizations (MSOs). It also imposes notice requirements on "noticing entities," which is defined to include private equity groups, hedge funds and entities created for the purposes of entering into agreements or transactions with healthcare entities.

Indiana

Indiana's Ind. Code § 25-1-8.5 requires a 90-day pre-closing notice to the state AG. It also empowers the AG to investigate market concentration of a healthcare entity at any time. After reviewing a potential transaction, the AG may analyze any antitrust concerns in writing and issue a civil investigative demand.

Maine

Maine's 22 M.R.S.A. § 1730-A placed a one-year moratorium on certain transactions, prohibiting a private equity company or real estate investment trust from acquiring or increasing a direct or indirect ownership interest, operational control or financial control over a hospital operating in Maine. The moratorium will expire June 15.

Massachusetts

Already enacted, Mass. Gen. Laws Ch. 6D § 13; 958 CMR 7.00 requires covered entities to provide a 60-day pre-closing notice of material change transactions to the AG, the Health Policy Commission (the Commission) and the Center for Health Information and Analysis. The Commission is authorized to conduct a preliminary review of the transaction and may conduct a Cost and Market Impact Review (CMIR). The Commission has 185 days to complete its CMIR, creating potentially significant closing delays. After reviewing the Commission's report of the transaction, the AG may conduct an investigation into any anticompetitive behavior.

New Mexico

New Mexico's NMSA § 24A-9-1 requires parties to provide pre-closing notice of transactions involving covered hospitals and acquisitions of certain healthcare providers by insurers to the New Mexico Health Care Authority (HCA). The HCA will review the transaction and host at least one public comment forum. The HCA may then approve, conditionally approve or disapprove a transaction.

Rhode Island

Rhode Island's 110 R.I. Code R. 30-00-5 requires a 60-day pre-closing notice of covered transactions to the AG. This law covers transactions involving "significant equity investors," including private equity companies with a financial interest in a medical practice group or an MSO.

Washington

Washington's SB 5122.SL reiterates the existing requirement that certain entities must provide the AG with a copy of any Hart-Scott-Rodino (HSR) filing. HSR filings provided under this provision are confidential and may only be disclosed by the AG pursuant to a protective order entered by an agency, a court or a judicial officer.

Table 1: States with Recently Enacted Transaction Review Laws

States To Watch in 2026 for Ongoing Expansions to Healthcare Transaction Oversight

In 2026, healthcare transaction review efforts are already underway. Numerous state legislatures and healthcare regulators have continued to introduce and adopt processes that impose new or expanding regulatory oversight of healthcare transactions, particularly transactions aimed at private equity. Proposals in Illinois, Massachusetts and Pennsylvania expressly regulate private equity–backed transactions. These activities come as healthcare regulators continue to express concern over accelerating consolidation, citing acquisitions backed by private equity firms, transactions among large health systems and expanding cross‑state provider networks. This is also evident at the federal level in the Federal Trade Commission's attempt to expand HSR filings.¹

We set forth below brief summaries of key state legislation introduced thus far this year. While the 2026 legislative session is still relatively young, we expect these efforts will only continue. These bills signal that 2026 could bring more rigorous state oversight. Healthcare entities and investors alike should remain vigilant and keep these trends in mind early in the deal structuring process.

Colorado

Colorado's SB 26-041 would require (i) entities to provide a 60-day pre-closing notice to the AG for covered transactions, and (ii) entities filing an HSR notice for a transaction to provide a copy of their filing to the AG. The AG would also have the authority to challenge certain nonprofit transactions.

Hawaii

Hawaii's SB 3175 would require entities to provide a 180-day pre-closing notice to the State Health Planning and Development Agency (SHPDA) for covered transactions, which would have the discretion to conduct a public interest review. The SHPDA would have the authority to approve, conditionally approve or disapprove a transaction, with legislative approval required for certain vertically integrated healthcare transactions.

Illinois

Illinois' HB 5000 takes square aim at private equity and hedge fund investors, expanding the scope of covered transactions to include transactions where the parties to the transaction "own or control, directly or indirectly" a healthcare entity. Parties would be required to provide a 30-day pre-closing notice to the AG for covered transactions.

Maine

Maine's HP 1480 requires a 180-day pre-closing notice to the Maine Department of Health and Human Services (DHHS) for covered transactions. The DHHS would have the authority to approve, conditionally approve or disapprove a transaction. It may also initiate a comprehensive review of the transaction, which includes at least one public hearing or meeting to hear comments from interested parties. HP 1481 would require entities filing an HSR notice to provide a copy to the AG.

Massachusetts

Massachusetts' H. 2478 requires a 180-day pre-closing notice to the Massachusetts Department of Public Health (DPH) and a 90-day notice to patients for certain transactions. The DPH may also conduct a public hearing regarding the transaction to assess the impact of the transaction on access to services. The proposed bill also requires certain physician practices to register with the Board of Registration in Medicine and disclose the identity of any "substantial equity investor" and any contracted MSO.

New York

New York's A10007, Part H, and S09007, Part H, would require a 30-day pre-closing notice to the New York State Department of Health (NYSDOH) for covered transactions. The NYSDOH may initiate a 180-day CMIR, delaying a transaction's closing. And it may require any party to a transaction, including "any person with control over a transaction party," to submit additional information as needed, pulling private equity investors into the transaction review process.

As part of the state's 2026-2027 fiscal year Executive Budget, Gov. Kathy Hochul introduced proposed amendments to state law. The amendments would require certain pre-closing disclosure statements related to any recent substantial reduction in services by a party or person with control over a party, such as a private equity group, and additional disclosures regarding the transaction's financing. As in the aforementioned proposed legislation, the NYSDOH would conduct a preliminary review of the transaction and have the discretion to conduct a CMIR, delaying closing for up to 180 days. Parties would be subject to post-closing reporting for five years of metrics related to the transaction's impact, including cost, access and quality.

Pennsylvania

Pennsylvania's HB 2115 requires a 120-day pre-closing notice to the AG for covered transactions. In addition to healthcare facilities and provider organizations, the bill also applies to transactions involving "health care facility systems," which encompasses healthcare facilities with private equity ownership. It would also require entities filing an HSR notice to provide a copy to the AG.

Rhode Island

Rhode Island's S 2492 requires a 180-day pre-closing notice to the AG and the Rhode Island Department of Health (RI DOH) for covered transactions. The AG and RI DOH would have the authority to approve or conditionally approve a transaction or conduct a CMIR.

In addition to S 2492, H 7172 would require a 60-day pre-closing notice to the AG and RI DOH for covered transactions. H 7172 clearly addresses private equity ownership and MSO involvement, requiring enhanced disclosures for transactions involving a "significant equity investor" and "management services, lease, or related-party agreements."

Vermont

Vermont's H.583 prohibits certain transactions and requires healthcare entities to report certain financial, organizational and ownership information to the AG and the Green Mountain Care Board upon consummation of a material change transaction. This proposed bill requires identification of any entity that has an ownership interest or is a significant equity investor in an MSO.

Virginia

Virginia's HB 1458 directs the Secretary of Health and Human Resources to convene a work group to study the impact of private equity on healthcare. However, this proposed bill has been continued to 2027.

Washington

Washington's HB 2548 requires a 60-day notice to the AG for covered transactions, including changes in the ownership or control of a healthcare entity. The proposed bill would also allow the AG to request additional information, requiring the parties to delay transaction closing for at least 30 days after substantially complying with the AG's request.

HB 1072 requires a 60-day pre-closing application to the Washington State Department of Health (DOH) for transactions that may reduce access to reproductive, end-of-life or gender-affirming care. The DOH has the authority to approve, conditionally approve, modify or disapprove a transaction.

Lastly, HB 1881 and SB 5704 would require 90-day pre-closing notices to the AG and the Washington State Health Care Authority (HCA) for covered transactions. For certain material change transactions, the review conducted by the HCA must include at least one public hearing. The HCA may also initiate a comprehensive review. After reviewing the HCA's report, the AG may approve, conditionally approve, modify or disapprove a transaction.

Table 2: States with Transaction Review Laws Proposed in 2026

Key Takeaways

State laws are changing quickly. Legislation may have been introduced in a state in which you are contemplating a transaction or that otherwise impacts your organization. Stay current. Remain vigilant. Monitor developments.

Transactions involving private equity firms continue to be under the microscope, and new legislation may also address transactions involving MSOs. If legislation is proposed or ultimately becomes law, it is important to understand which healthcare organizations are impacted, whether transactions involving private equity firms or MSOs must be disclosed, whether there are any exclusions or materiality thresholds, which state agencies are involved, and what your obligations are for reporting or potentially obtaining state approval.

Footnote

1 See BakerHostetler Client Alerts “ 2026 HSR Filing Thresholds and Filing Fees Announced; 2026 Interlocking Directorate Thresholds Announced” and “ Federal Court Vacates and Sets Aside the New HSR Form.”

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.