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March 15, 2023    

States Are Beginning to Require Pre-Closing Approval of Historically Unregulated Transactions

This Bulletin is brought to you by AHLA’s Business Law and Governance Practice Group.
  • March 15, 2023
  • Evelynn X. Bui, JD, MPH , Venable LLP
  • Ari J. Markenson, JD, MPH , Venable LLP
  • Patrick B. Dunbar, Law Clerk , Venable LLP
  • Gabriella R. Joseph, Law Clerk , Venable LLP

In recent years, state regulators have increasingly turned their attention to certain private health care transactions that, until now, have largely gone unregulated because they did not need regulatory approval or consent to be consummated. Several states, via recent legislation, are implementing pre-closing review processes for certain health care transactions they believe present risks to health care systems and local communities. This regulatory scrutiny is a response to the increasing consolidation of health care in the hands of investment-backed private equity, venture capital entities, and proprietary investors. Washington, Oregon, California, and New York (each, a “State,” and together, the “States”) are at the forefront of this regulatory trend, each State having introduced legislation in the last five years. While California and New York have yet to fully implement their own review processes, comments and proposed legislation suggest these schemes will share a structure similar to those already implemented in Washington and Oregon. Health care investors are likely to see additional states implement similar regulatory requirements. In that respect, a thorough understanding of the purpose and process behind these transaction approval requirements is essential when targeting health care entity acquisitions or bringing such a business to market.


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