This month, the New York Department of Health (DOH) published a Material Transactions Notice Form for “heath care entities” to report “material transactions” to DOH. The current Form and instructions can be found here.
Under current law (effective as of August 1, 2023), health care entities involved in “material transaction(s)[1]” are required to provide written notice to DOH at least thirty (30) days prior to the closing of the transaction. DOH does not have the right to approve or disapprove of the transaction, but the basics of the transaction are posted on DOH’s website for public viewing. However, “de minimis” transactions are not reportable. A “de minimis” transaction is a single transaction or series of transactions that would result in a health care entity increasing its total gross in-state revenues by less than the $25 million threshold.
The newly published form requires significantly more information and documentation than is expressly set forth in the underlying law or has been submitted by parties to date. If your transaction is subject to the law, you will need more time and resources to prepare the notice and documentation.
For example, DOH is now asking for:
- both parties’ pre- and post-closing organizational charts, including affiliates;
- financial statements for the last two fiscal years and the surviving entity’s projected financial statements; and
- organizational documents, financing agreements, operating/partnership agreements, and all other transaction documents.
If applicable to the transaction, DOH is also asking for copies of any fairness opinions and any communications from the press or any stakeholder “raising concerns” about the transaction.
The form also includes a full set of detailed questions. Parties to a reportable material transaction must now provide:
- information about the character and fitness of the parties and their respective officers, directors, managers, owners, trustees, and members;
- information regarding any transaction activity of the parties during the previous three years, which seems to be asking for any transaction, not just those “material transactions” subject to reporting to DOH;
- information regarding pre- and post-closing Medicaid beneficiaries;
- details around any “commitments” the parties plan to make or have made “to address anticipated impacts” of the transaction; and
- depending in part on the transaction structure, the average commercial payor rate by service line before and after the transaction.
It is not clear if such additional information and documentation will now be published on DOH’s website.
If you have any questions please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].
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[1] A “material transaction” includes any of the following: (a) a merger of one or more health care entities; (b) an acquisition of one or more health care entities, including the assignment, sale, or other conveyance of assets, or the transfer of control, such as contracting for services commonly provided through a management or administrative services agreement between a practice and an MSO; (c) an affiliation agreement or contract formed between a health-care entity and another person; and (d) the formation of a partnership, joint venture, accountable care organization, parent organization, or MSO for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health-care providers.
