Q2 2025 Update on State Efforts to Regulate Healthcare Consolidation

New state healthcare transaction reporting and corporate practice of medicine (CPOM) laws faced significant headwinds in 2024 with increased opposition by state legislators and advocacy participation by industry stakeholders. The result was the failure of eight bills and only Indiana successfully passing a transaction reporting statute. The most notable bill was California Assembly Bill (AB) 3129 that would have required consent of the California Attorney General for transactions involving private equity investment and the codification of CPOM laws for both medical and dental practices. Gov. Gavin Newsom vetoed that bill because it was redundant with California's existing transaction reporting statute that went into effect earlier in the year.

However, after the U.S. election, state legislative activity began to regain traction, with the Massachusetts Legislature passing new updates to its framework during the final days of 2024. That momentum carried into the new year, with more than a dozen states proposing a flurry of bills. The deluge was likely a response to local pressure to address concerns stemming from high-profile failures of certain health systems across the country, a perceived change in enforcement posture from the Federal Trade Commission and a renewed campaign by advocacy groups pushing for enhanced changes. Also, the study of healthcare consolidation by states became a bipartisan issue, with Indiana and Texas leading the charge for conservative states.

The surge of bills in 2025 consisted of one or more of the following parts: 1) reporting and/or consent requirements for healthcare transactions, 2) ownership transparency disclosure obligations, 3) CPOM restrictions and 4) limitations on the use of restrictive covenants. Holland & Knight profiled many of these bills in a recent report on 2024 activity. (See "A Year-End Report for Healthcare Antitrust and What to Expect Later in 2025," Jan. 23, 2025).

This Holland & Knight alert provides key updates and considerations as we head into the second quarter (Q2) of 2025.¹ The current 2025 scoreboard as of April 1 is 1-1, with Massachusetts signing its bill into law and Washington state's bills mostly stalling out in the legislative process.

Key Updates in Proposed State Legislation

California

Despite Gov. Newsom's veto of AB 3129, California has introduced three bills worth following in 2025. Senate Bill (SB) 25 requires certain parties to submit full Hart-Scott-Rodino Act filings to the California Attorney General – this type of bill provides awareness to state authorities of transactions without imposing additional obligations on them. AB 1415 proposes amendments to the existing healthcare transaction reporting law that broadens the net of captured transactions to include those involving management service organizations, health systems, parent companies of healthcare organizations and private equity groups. More surprising, the California Senate reintroduced the CPOM elements of AB 3129 in SB 351 that codifies existing law. (See Holland & Knight's previous alert, "New Year, Same Bill: California Reintroduces Bill Aimed at Healthcare Private Equity Investment," Feb. 14, 2025.) Given that the law was already deemed redundant by Gov. Newsom in 2024, the corporate practice of medicine has been enforced in California for decades (including cases in 2024) and the existing reporting statute could empower the Office of Healthcare Affordability to study the effects of private equity investment in healthcare, the question remains as to the need for this law.

Colorado

In March 2025, Colorado introduced SB 198, which expands existing requirements for notifying the attorney general about transactions in which healthcare, long-term care, and – somewhat surprisingly – veterinary care entities are involved in mergers, acquisitions or affiliations. These parties would need to submit notice at least 60 days before the transaction's effective date. The Colorado attorney general is authorized to review these notices to determine if the transaction conflicts with the public interest, based on criteria outlined in the bill. The bill also specifies conditions under which transactions may proceed, including cases where the attorney general either waives a formal assessment or provides approval. Post-closing annual reporting also must occur for five years after closing. The bill provides real enforcement authority for the attorney general, who would have the right to convert the review into a formal investigation and/or bring an action in the district court to enjoin or unwind a material transaction.

Indiana

As noted, Indiana's healthcare transaction reporting law came into effect in July 2024, requiring entities with assets exceeding $10 million to notify the Attorney General 90 days before closing a transaction. Then days before California's Gov. Newsom vetoed AB 3129 in 2024, incoming Indiana Gov. Mike Braun announced a new healthcare plan that included requiring consent for all private equity transactions. When he came into office, the Indiana House proposed House Bill (HB) 1666, which would require the state's attorney general to approve all private equity investment in healthcare and updated annual reporting requirements. As the bill moved through the Indiana House and Senate, several amendments were appended, including creating an approval board and adding an independent practice exception, after legislators were moved by the testimony of independent medical and dental practices. However, before the Indiana Senate passed the bill, it removed the transaction consent requirement, leaving only an ownership disclosure requirement. Since this revised bill does not implement Gov. Braun's plan for healthcare in the state, expect more changes before it ultimately lands on his desk.

Massachusetts

Massachusetts expanded its healthcare transaction reporting law with H.5159, enacted in January 2025, and effective on April 8, 2025. Unlike other states' failed bills, H.5159 strengthens oversight of private equity investments without creating redundant reporting frameworks. It broadens reporting requirements for healthcare acquisitions, mandates post-transaction monitoring for five years, imposes stricter financial disclosures on private equity and real estate investment trust (REIT)-affiliated entities and expands false claims liability for owners of healthcare businesses. (For a more detailed analysis, see Holland & Knight's year-end report.) The Massachusetts Health Policy Commission (HPC) released Advance Guidance and a revised form ahead of the law becoming effective while it updates its regulations.

Minnesota

After Minnesota failed to pass expansive updates to its healthcare transaction laws in 2024, the legislature proposed two new bills in 2025 that focused on ownership disclosure and private equity investments in skilled nursing facilities and assisted living facilities. A third bill is expected soon.

Minnesota Senate File No. 2939 (SF 2939) seeks to enhance transparency in healthcare by requiring entities to report ownership and control details to the Commissioner of Health. The bill mandates annual public reports, allowing greater oversight of healthcare operations, and includes enforcement mechanisms with penalties for noncompliance.

Notably, Minnesota SF 2972 requires state attorney general approval for private equity company acquisitions of nursing homes and assisted living facilities in Minnesota. The bill proposes conducting a study on such acquisitions and specifies specific operational parameters and limitations for private equity owners once they have invested in a business. These requirements include attorney general consent for the use of REITs and a required reinvestment of 75 percent of funds received from public programs into direct patient care of residents.

New Mexico

New Mexico recently sent HB 586 to Gov. Michelle Grisham for signature. Such bill would augment the state's existing healthcare transaction framework by broadening transaction reporting to include private equity transactions involving hospitals and insurance company affiliated entities acquiring physician practices. The bill also would require post-transaction reporting for three years thereafter, impose higher penalties and add whistleblower protections. Of all of the proposed bills in 2025, it was the quickest to be forwarded to the governor for consideration. Contrast that expedited pathway to earlier in the year, when a more comprehensive bill that would have also covered telemedicine providers died in committee.

New York

The New York State Department of Health (DOH) recently released FAQs to clarify its "Disclosure of Material Transactions" law, effective Aug. 1, 2023. This law requires healthcare entities (HCEs) engaging in "material transactions" to notify the DOH at least 30 days before closing. Proposed amendments to this law in Gov. Kathy Hochul's 2025 budget could expand oversight and disclosure requirements with the addition of a comprehensive review process.

The recent FAQs memorialize answers to past questions submitted to DOH and specify that dental practices, clinical laboratories, and pharmacies qualify as HCEs under the law while leaving ambiguity regarding allied health professions. Transactions reaching a $25 million revenue threshold over a 12-month period, including mergers and acquisitions (M&A), are also considered "material." However, clinical affiliations and transactions already subject to the Certificate of Need (CON) process are generally exempt unless part of the transaction falls outside CON regulations. (For a more detailed analysis, see Holland & Knight's previous alert, "New York State Department of Health Issues Long-Awaited Guidance on Material Transactions Law," March 24, 2025.) To the extent that stakeholders believe the FAQ guidance is too broad, they should raise those comments during the legislative process for the pending amendments noted above.

Oregon

Oregon successfully defended its healthcare transaction reporting law against a legal challenge in 2024, but the state failed to adopt a more restrictive CPOM bill. However, SB 951 renewed the discussion in early 2025 and seeks to overhaul the CPOM framework in Oregon, while also limiting the use of restrictive covenants. If passed, it could fundamentally change practice management models for physician groups in Oregon and stifle future investment. The bill would prohibit common ownership between management services organizations (MSOs) and the practices they manage and goes beyond California AB 3129's restrictions to prohibit use of directed stock transfer agreements, restricts certain governance models for managed practices and prohibits many forms of restrictive covenants. Additionally, the bill would codify and curtail restrictions on MSO activities (notably, the negotiation or termination of payer contracts and establishing billing and collecting policies). If passed, provisions of the bill would take effect on a staggered schedule beginning in 2025, with the last components effective in 2029. SB 951's viability could be questioned by stakeholders given its possible redundancy with Oregon's long-established CPOM doctrine and the Oregon Healthcare Authority's (OHA) oversight authority for certain transactions involving physician groups.

Texas

In early 2025, Texas proposed two potential pathways to study the effects of healthcare consolidation. SB 1595 and HB 4408 proposed a general transaction reporting statute that included ongoing annual ownership disclosure requirements. Such reporting requirements have caused stakeholders concern given the level of financial and ownership information to be disclosed and the lack of confidentiality protections for disclosed information. Alternatively, legislators also introduced HB 2747 in February 2025, which proposed a more reasonable transaction reporting framework, confidentiality protections and a suggestion to the Texas attorney general to study the effects of healthcare consolidation over a period of several years. Amendments are expected for both sets of laws, and advocacy on both sides have made Texas a state to watch in 2025. What happens in Texas could affect the momentum of all new bills across the country and influence other conservative-leaning legislatures.

Washington

Even though efforts to improve existing healthcare transaction laws in Washington in 2024 failed, legislators filed several bills in 2025 that were mostly unsuccessful. The bills focused on 1) approval requirements for transactions affecting gender-affirming, end-of-life or reproductive care, 2) CPOM restrictions, 3) general transaction reporting, 4) restrictive covenant restrictions and 5) the establishment of a healthcare entity registry. All of these measures failed as of the beginning of Q2 except for the healthcare entity registry law, making Washington's bills the first failure of 2025.

Practical Considerations for Healthcare M&A

As 2025 continues to unfold, healthcare organizations, investors and stakeholders should stay proactive, informed and prepared for evolving regulatory landscapes. Successfully navigating these changes will require strategic planning, adherence to new reporting requirements and an emphasis on transparency. Participating in the discourse for these laws will also help legislators ensure that they have the necessary perspectives from all affected stakeholders, relevant, local data that might differ from national narratives and an understanding of any unintended consequences of the legislation.

For healthcare organizations that are considering closing transactions in 2025 and beyond, below are some practical considerations to navigate the recent state efforts to regulate healthcare consolidation.

• Assess Reporting Requirements: Evaluate the applicability and timelines of HSR rules and state-specific transaction laws before finalizing deals.
• Plan for and Manage Delays: Factor in extended review timelines and increased regulator discourse into transaction planning; raising these laws early in the process will mitigate any unnecessary delays.
• Allocate Compliance Costs: Budget for additional filing costs, document preparation and legal counsel spend.
• Develop Strong Investment Rationales: Document and memorialize analyses that demonstrate how transactions improve the quality of care, increase access to care, reduce costs and improve the healthcare ecosystem (e.g., increased electronic record connectivity).
• Stay the Course: Many states now require or may require post-closing transaction reporting. Stay on top of deadlines and ensure that transaction objectives stated in the submissions are tracked and can be reported on after the deal.
• Protect Your Data: Transparency in healthcare transactions will remain a priority, with more states mandating public access to information submitted in transaction notices, annual disclosures and agency testimony. Learn state confidentiality laws and procedures and protect your commercially sensitive information from public release.
• Stay Informed: Utilize tools such as HK Navigator to track regulatory developments and legislative changes that may impact healthcare transactions.
• Get Involved: The best time to advocate for change in these laws is when they are proceeding through the legislative process. Think about how proposed bills may affect transactions in the future. A little investment now could go a long way. Legislatures want to hear all perspectives from stakeholders in the industry so that they can have a balanced discussion and make an informed decision

Notes

¹ Note that there were also proposed laws in Illinois and Connecticut that Holland & Knight covered in its year-end report and a February 2025 webinar with the Office of the Attorney General of Illinois. Iowa also proposed a law similar to those discussed in this alert, but it focused on healthcare facilities and housing.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.