This week, Governor Hochul announced a proposal significantly expanding state scrutiny over corporate health care transactions. This proposal reiterates previously expressed concerns that both private equity and health system acquisitions of medical and dental practices lead to reduced access to care, declining quality and higher prices.
While stopping short of requiring actual Health Department approval of these medical and dental practice transactions (which remains the case for services subject to Certificate of Need approval), this new proposal calls for significant post-transaction reporting so the state can monitor the impact transactions have on availability, quality and pricing of health care services.
We previously reported on a New York State initiative to oversee health care transactions to ensure that licensed health care providers remain in control of the practice of medicine and dentistry without undue influence by corporate owners/investors and that the cost of health care will not be increased through such transactions. This initiative goes back to 2023 with the passage of Public Health Law (PHL) Article 45-A which required reporting to the Health Department of material ($25M+) transactions.
Last May, we reported that the NYS Assembly failed to pass legislation to amend PHL 45-A, representing a retrenchment. The concern was that the increased reporting requirements would lead to transaction delays and discourage investments in health care innovation.
We will continue to monitor and report on state initiatives regarding health care mergers, acquisitions and other transactions such as joint ventures. We remind you that even if transactions fall below the PHL’s $25M threshold, New York remains one of the most rigorous “corporate practice of medicine” states in the nation and that arrangements that violate this restriction can be subject to both civil and criminal penalties. We remain available to answer any questions and assist you in this evolving and challenging regulatory arena.
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