On January 21, 2025, New York Governor Kathy Hochul released the proposed FY 2026 New York State Executive Budget, which includes enhanced scrutiny of material transactions involving health care entities.
A law enacted in 2023 requires health care entities to submit a written notice to the Department of Health (DOH), providing basic information about “material transactions” at least 30 days before closing. Upon receipt, DOH posts the basic information about the transaction on its website. A “material transaction” includes mergers, acquisitions, and affiliations that occur during a single transaction or within a rolling 12-month period that result(s) in a health care entity increasing its total gross in-state revenues by $25 million or more. To date, DOH has not formally provided an interpretation of the $25 million threshold. The law contains exceptions, including for transactions that are subject to the New York Certificate of Need process.
If the proposal in the FY 2026 budget is enacted, the legislation would extend timeframes for closing such material transactions and subject these transactions to heightened regulatory scrutiny. The notice would need to be submitted at least 60 days before the anticipated closing date, and DOH could request additional documents and information from the parties involved in the transaction, as well as their respective parent and subsidiary entities.
Upon submission of the notice, DOH would conduct a preliminary review to determine if a full cost and market impact review is necessary, potentially delaying the transaction for up to 180 days. DOH could request further information for evaluation as part of this process as well. The transactions, however, still do not require DOH approval. In addition, parties to material transactions would be required to annually report metrics related to cost, quality, access, health equity, and competition.
The proposed legislation would protect documentation, data, and information submitted by the parties from public disclosures, but it may be used in investigations or reviews.
The New York State Assembly and Senate will now review the legislation as part of the budget approval process. The governor’s executive budget approved by the State Senate and Assembly must be signed into law by April 1, 2025.
Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].