2025 Picks Up Steam with Increased Scrutiny of Health Care Transactions and Corporate Structures

A new year brings about new legislation.

Given the recent trend of health care transactions coming under increased scrutiny at the state level, EBG has released its map summarizing states that already have laws regulating health care transactions. As legislatures reconvene around the country, there continues to be regulatory scrutiny of health care transactions and private equity investment in health care. Below is a brief summary of recently proposed legislation.

California

On February 12, 2025, the California Senate introduced SB 351, which is remarkably similar to AB 3129, a bill the EBG team wrote about extensively in 2024 and that Governor Gavin Newsom vetoed in September 2024. The proposed legislation has three key components: (i) it adds new defined terms, including “hedge fund” and “private equity group,” in an attempt to capture all parties involved with Management Service Organizations (“MSOs”) and Dental Service Organizations (“DSOs”); (ii) it provides a list of prohibitions for any “private equity group” or “hedge fund” that is “involved in any manner with a physician or dental practice doing business in the state; and (iii) it contains a provision that restates existing California law on restrictive covenants and California’s prohibition on restrictions barring a provider from competing with a practice in the event of termination or resignation. Whether this bill advances and is ultimately signed remains unclear. EBG is actively monitoring this legislation.

Connecticut

Connecticut is no stranger to bills targeting private equity in health care and the 2025 legislative session is no different. Below is a brief summary of the proposed bills:

• SB 261 – This bill is intended to “limit the ability for private equity firms to purchase medical care facilities and further protect health care clinicians from the corporate practice of medicine.” The bill would impose restrictions on private equity firms’ ability to lease property back to a hospital after purchasing land rights and would also add restrictions that would prevent any direct or indirect interference with a clinician’s independent practice authority and the exercise of their professional judgment.
• SB 469 – This bill is intended to “improve public health in the state” by restricting the acquisition of hospitals by private equity firms, prohibiting hospitals from participating in real estate investment trust and requiring physician-led ownership for medical groups and ambulatory surgical centers.
• SB 567 – This bill would expand the authority of the state attorney general (“AG”) and Commissioner of Health Strategy to regulate private equity ownership of certain health care facilities and restrict self-dealing property transactions.
• SB 837 – This bill is intended to “promote health care industry competition and better health care quality in the state” by amending Connecticut’s material transaction notification statute by requiring notification of any group practice’s transaction with a private equity company. It also removes the “presumption” in favor of approving certificate of needs applications for the transfer of ownership of a large group practice.
• HB 6570 – This bill is aimed at preventing the consolidation of health care services by nonmedical entities and safeguarding patient access to quality health care. It would: (i) prohibit a private equity firm from acquiring ownership or control of a health care provider’s practice or health care facility, and (ii) require the administrator of each health care provider practice and health care facility to disclose the ownership structure of the provider or facility.
• HB 6873 – This would strengthen the notice requirements that parties to a material change health care transaction must give to the AG, within 60 days instead of 30. The AG shall review the notice, evaluate the transaction’s compliance with antitrust laws, and, if the transaction would not otherwise require a certificate of need, consult with the Office of Health Strategy regarding the effect of the transaction on access, quality, and affordability of health care in the parties’ primary service areas.

Illinois

SB 1998 – Introduced February 6, 2025, as drafted this bill would amend the Illinois Antitrust Act, which already requires health care facilities or provider organizations to provide notice to the state AG regarding “covered transactions.” These are defined as mergers, acquisitions, or contracting affiliations between two or more health care facilities or provider organizations not previously under common ownership or contracting affiliation. Under the proposed amendment, the Illinois AG must provide written consent to a covered transaction if a private equity group or hedge fund provides any financing. Notably, under the proposed amendment, only notice is required if the transaction does not include private equity or hedge fund financing.

Indiana

In March 2024, Indiana amended its state law, effective July 1, 2024, to require written notice of health care entities’ mergers and acquisitions (see our prior post). The latest bill is HB 1666, which the Indiana House of Representatives passed on February 13, 2025, would remove the existing $10 million threshold and thereby expand reporting requirements to cover any merger or acquisition between an Indiana health care entity and another health care entity. Under the proposed amendment, the notice would be sent to a statutorily created “merger approval board,” which would retain the ability to approve or deny the proposed transaction subject to criteria detailed in HB 1666. In addition to the notice and approval obligation, HB1666 would require health care entities to file annual reports and disclose ownership information to specified state agencies. The bill is currently in the Indiana Senate and is expected to pass in some form.

New Mexico

SB 14 – As drafted this bill, would enact the Health Care Consolidation and Transparency Act, which would provide—with a number of exceptions—oversight of mergers and acquisitions and other transactions involving direct or indirect changes of control or assets of health care entities. As drafted the bill contains notice requirements; would provide for preliminary and comprehensive reviews of proposed transactions by the Office of Superintendent of Insurance; and would require approval, approval with conditions, or disapproval of proposed transactions by that office. The legislation further contains reporting requirements with respect to disclosure of health care entity ownership and control.

New York

In 2023, New York enacted N.Y. Pub. Health Law § 4550-4552 requiring health care entities to submit to the state Department of Health written notice of proposed material transactions, including: (i) the anticipated impact of the material transaction on cost, quality, access, health equity, and competition in the impacted markets; and (ii) any commitments by the health care entity to address anticipated impacts. Governor Kathy Hochul’s 2026 budget proposal (Part S) would amend Section 4552 to strengthen material transactions reporting requirements changing the notice deadline to 60 days before the closing date of the transaction (as opposed to 30).

The amended law would also require a statement as to whether any party to the transaction (including a controlling person or parent company), owns any other health care entity that within the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and a statement as to whether a sale-leaseback agreement, mortgage or lease, or other payments associated with real estate are a component of the proposed transaction.

The department would conduct a preliminary review of all proposed transactions, which may consist of a full cost and market impact review (“CMIR”). If a CMIR is required, the department may require parties to delay the proposed transaction closing until the CMIR is completed, but in no event shall the closing be delayed more than 180 days from the date of the preliminary review of the proposed transaction. Further, parties to a material transaction would be required to notify the department annually—for a five-year period—of factors and metrics to assess the impacts of the transaction.

Notably, under the Governor’s proposed budget, the changes to N.Y. Pub. Health Law § 4550-4552 would not require Department of Health approval for any material transactions but simply notice consistent with the requirements set forth in the proposed amendment.

Oregon

SB 951 –As drafted this bill would prohibit an MSO, an individual who works as an independent contractor with an MSO, or a shareholder, director, officer or employee of an MSO from owning or controlling shares in, serving as a director or officer of, being an employee of, working as an independent contractor with, or otherwise managing, directing the management of or participating in managing a professional medical entity with which the MSO has a contract for services. The current draft of the bill specifies what conduct constitutes ownership or control of a professional medical entity; voids noncompetition agreements, nondisclosure agreements, and nondisparagement agreements between certain business entities and medical professionals, with specified exceptions, and prohibits retaliation.

Texas

HB 2747 – As drafted this bill would require certain health care entities, including providers, facilities, and provider organizations (which includes MSOs) to submit notice of material change transactions to the state AG not less than 90 days before the transaction; and grants the AG authority to conduct certain related studies on health care markets, imposing civil and administrative penalties.

Vermont

H 71 – Relating to health care entity transaction oversight and clinical decision making, as drafted this bill would require health care entities to provide notice to a board and state AG before entering into certain proposed transactions. The board, in consultation with the AG, would review, approve, approve with conditions, or disapprove the proposals. The measure would also: 1) prohibit corporations from practicing medicine or otherwise interfering with health care providers’ professional judgment and clinical decision making, and 2) require public reporting on ownership and control of certain health care entities.

Washington

HB 1881/SB 5704 – This legislation would enhance requirements regarding notice for material changes to the operations and governance structure of participants in the health care marketplace.

SB 5387 – As drafted this bill would generally prohibits the corporate practice of health care by deeming it unlawful for an individual, corporation, partnership, or other entity without a license to practice a health care profession, own a health care practice, employ licensed providers, etc. The current version of the bill sets forth requirements for licensed health care providers establishing and owning a health care practice and limits certain activities of shareholders, directors, or officers of a health care practice; and generally prohibits those without a license from interfering with/controlling the professional judgment or ultimate clinical decisions of a licensed health provider in various settings. It also sets forth conditions constituting unprofessional conduct by license holders.

Massachusetts

HB 5159 – As EBG wrote in January 2025, Massachusetts recently passed a sweeping health care market oversight bill that takes effect April 8, 2025. Among other things, HB 5159 extends the authority of the state’s Health Policy Commission (“HPC”) regarding Notices of Material Change to indirect owners and affiliates of health care providers, such as private equity companies, significant equity investors, MSOs, and health care REITs. The law also broadens the transactions that are subject to the HPC’s Material Change requirements to include: (i) significant expansions in capacity of a provider or provider organization; (ii) transactions involving a significant equity investor resulting in a change of ownership or control of a provider or provider organization; (iii) real estate sale lease-back arrangements and other significant acquisitions, sales, or transfers of assets; and (iv) conversions of a provider or provider organization from a nonprofit to a for-profit. The HPC will be authorized to require the submission of information from significant equity investors.  

Notably, legislation has been introduced in the Massachusetts General Court (SD.1910) which seeks to update the months old legislation.

The Epstein Becker Green team will be tracking these proposed bills and will provide further updates. Look for more in-depth Insights on the California, Oregon, Texas, and Washington initiatives in the near future.

Epstein Becker Green Attorney Ann W. Parks contributed to the preparation of this post.