Navigating the Matrix of State Healthcare Approvals
The outlook for federal antitrust enforcement remains murky, at best, with uncertainty about whether the new federal HSR rules, merger guidelines, and existing enforcement actions.
The forecast for state antitrust enforcement, however, is much clearer, particularly with respect to the healthcare industry.
State antitrust enforcers have taken a more active role in recent years, less willing to sit back while the Federal Trade Commission (FTC) or the Antitrust Division of the Department of Justice (DOJ) takes the lead in investigating potential anticompetitive conduct or corporate consolidations whose effects will be felt at the state level. The healthcare industry is a focus of state enforcement efforts due to its local nature and importance for the citizens of a given state. In the last few years, for example, several states have passed legislation establishing state-level notification regimes, often targeting healthcare transactions, based on federal HSR Act. These notification regimes – often called “Baby HSRs”, “Mini HSRs”, or “Mini HSRs”, impose burdens on parties who are involved in transactions that fall below HSR Act thresholds or have limited direct ties to the state. These state-level reporting systems often impose different requirements – some of which are more onerous – on transacting parties than the HSR Act.
Unlike HSR Act, state-level reporting regimes can impose additional burdens or a higher level scrutiny when a transacting party is a private equity sponsor. This focus on private equity is usually justified by the fact that states are suspicious about private equity’s involvement in healthcare delivery, i.e. the profit motive could lower the quality of care delivered. The states that have passed or are considering legislation to curb friendly PC are also reflecting these concerns about profit motives affecting the quality of care.
The rise of state antitrust enforcement regimes in the healthcare industry is not new, with states implementing or considering new laws and regulations requiring additional approvals for healthcare transactions.
These emerging state-level reporting regimes are tracked in our interactive map available here, which identifies states with reporting regimes and provide a high-level indication of the types of requirements that may be imposed on healthcare transactions captured by the regimes. We encourage you bookmark the page, as we will continue updating the matrix as new states adopt reporting systems or pass laws to expand the existing ones.
