Health Law Advisor

Roughly two years in the making, the New York State Department of Health (NYS DOH) has issued long-awaited guidance on its material transactions law. Notably, the guidance provides clarity on how to calculate the “de minimis” exception to the material transaction law requirement—including an indication that “related” transactions only need to have a single party in common, which is an important consideration for providers and investors pursuing a “roll-up” strategy.

N.Y. Pub. Health Law Article 45-A, “Disclosure of Material Transactions,” took effect on August 1, 2023, and requires “health care entities” involved in a “material transaction” to provide written notice to the NYSDOH at least 30 days prior the proposed closing of a transaction. As our colleagues wrote at the time, the legislation grew out of concerns with the “proliferation of large physician practices being managed by entities that are investor-backed” (e.g., private equity).

These concerns have only increased in the past two years; more than a dozen states including New York have enacted health care transaction notice requirements. Currently, several state legislatures are attempting to either amend existing requirements or create new ones. New York is one state that is potentially amending its existing notice requirement. As we noted in March, proposed legislative changes to the New York law would include an extension of the notice deadline to 60 days; a statement as to whether any party to the transaction owns any other health care entity that within the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and a statement as to whether a sale-leaseback agreement, mortgage or lease, or other payments associated with real estate are a component of the proposed transaction.