New York is poised to expand its regulations governing significant healthcare transactions under the proposed Fiscal Year (FY) 2026 Executive Budget, unveiled by Governor Kathy Hochul on January 21, 2025. This budget proposes amendments to Article 45-A of New York’s Public Health Law, known as the Disclosure of Material Transactions Law, which has been in operation since August 1, 2023. The existing law mandates that involved parties in a “material transaction” notify the New York State Department of Health (DOH) both 30 days prior to and post-closure of the transaction. The FY 26 Executive Budget’s amendments aim to modify the existing notice requirements, extend waiting periods, and enhance DOH’s oversight of these transactions. Considering DOH has already recorded nine material transactions since the law’s inception, these changes reflect a deliberate move to tighten the regulatory reins on healthcare dealings, potentially influencing numerous stakeholders throughout the state.
Proposed Amendments to Article 45-A
Under the revealed FY 2026 amendments to Article 45-A, the scope and scrutiny of healthcare transactions in New York are set to expand significantly. Specifically, these revisions will redefine what constitutes a “material” transaction—those where a healthcare entity increases its gross in-state revenues by $25 million or more within a rolling 12-month period, involving mergers, acquisitions, affiliations, or partnerships. Entities fitting this definition include physician practices or groups, management services organizations, provider-sponsored organizations, health insurance plans, and other New York-based facilities or organizations that offer healthcare services.
The proposed changes further emphasize the importance of pre-closing notifications to the DOH. These notices, now extending from 30 days to 60 days prior to a transaction, must provide detailed information about the transaction terms, including any existing affiliations or partnerships, financial conditions, and operational shifts. This layered pre-transaction disclosure is designed to give regulators adequate time to assess the potential market and public health impacts before deals are finalized, aiming to mitigate any unforeseen consequences or disruptions in the healthcare continuum.
Changes in Pre-Closing Notice Requirement
One of the pivotal adjustments within the FY 2026 Executive Budget proposed amendments is the increased rigor in pre-closing notice requirements. Under the new mandates, entities will have to notify DOH not just 30 days, but a full 60 days before the transaction closes. This extended notification period is coupled with a requirement to deliver extensive details on the transaction well in advance. For instance, notices must now include whether any party to the transaction has recently closed or significantly reduced services in another healthcare entity within the past three years. This provision equips DOH with broader context and potential historical patterns of consolidation behavior.
Moreover, these pre-transaction notices must outline specific financial arrangements, such as sale-leaseback agreements, mortgages, and lease payment terms associated with real estate involved in the transaction. This additional layer of financial data aims to help regulators understand whether these transactions are primarily money-driven, possibly sidestepping public health priorities. The comprehensive information now required could delay transaction timelines but is posited to create a more transparent and thoroughly vetted transaction landscape, ensuring deals do not undercut New York’s healthcare infrastructure’s efficiency or equity.
DOH Preliminary Review
DOH’s role in evaluating healthcare transactions is set for a formidable shift. Unlike the previous FY 2024 Executive Budget, which suggested a formal approval process that was not adopted, the FY 26 amendments propose a preliminary yet impactful review process. DOH will undertake initial evaluations of all significant proposed transactions and has the authority to embark on a detailed cost and market impact review if deemed necessary. This preliminary review does not immediately equate to a transaction blockade but ensures that potentially disruptive deals undergo careful scrutiny.
The framework for this review includes considering the transaction’s potential effects on cost, care quality, healthcare access, and competitive dynamics. It reflects a commitment to catching early signs of market monopolization or reductions in care distribution efficiency. Although a set timeframe for completing these preliminary reviews is absent, if DOH determines the need for a full review, it can delay the closing of transactions for up to 180 days from the preliminary review’s completion. This provision could significantly elongate approval periods but underscores a measured and evidence-based approach to transaction oversight.
Five-Year Transaction Reporting Requirement
Introducing long-term oversight dynamics into the regulatory process, the proposed amendment mandates an extensive five-year post-transaction reporting requirement. Healthcare entities participating in significant transactions must submit an annual report to DOH each year on the transaction anniversary, detailing its influence on cost, quality, access, health equity, and competition. This enduring scrutiny aims to maintain a pulse on the long-lasting effects of these transactions, ensuring the purported benefits are realized while adverse impacts are mitigated.
Should DOH find it necessary, it can also request data from parent or subsidiary entities within 21 days to elucidate the transaction’s influence. This detailed and longitudinal evaluation strategy is designed to safeguard against initial optimism that fades post-transaction, holding healthcare entities accountable for their long-term promises and market performance. By framing these requirements within a five-year timeline, DOH commits to continuous vigilance and adaptive oversight, adding pressure for entities to adhere strictly to public health commitments and operational integrity.
Implications for Healthcare Entities
One key change in the FY 2026 Executive Budget proposed amendments is the stricter pre-closing notice requirements. Entities must now notify the Department of Health (DOH) not just 30 days, but a full 60 days before a transaction is finalized. This extended period is paired with the need to provide detailed information about the transaction well in advance. For example, notices must now specify whether any involved party has recently closed or significantly reduced services at another healthcare facility within the past three years. This requirement gives DOH a broader understanding of potential patterns of behavior.
Additionally, pre-transaction notices must describe specific financial arrangements, such as sale-leaseback agreements, mortgages, and lease payment terms associated with any real estate involved. This added financial data helps regulators assess whether transactions are primarily financially motivated, potentially ignoring public health priorities. While this comprehensive information could delay transaction timelines, it aims to foster a more transparent and thoroughly reviewed transaction landscape, ensuring that deals do not compromise the efficiency or equity of New York’s healthcare system.
