Expanded Healthcare Transaction Notice/Review Dropped from Final 2025/26 NYS Budget Bill

We recently wrote about proposed legislation that would have substantially increased the existing reporting requirements for material healthcare transactions in NYS that have existed since Public Health Law (PHL) Article 45-A was enacted two years ago. We provided a detailed review of the current PHL 45-A here and here.

The proposed legislation would have amended PHL 45-A and potentially required a “full cost and market impact review,” leading to up to a six-month delay before a transaction could go to closing. We noted earlier that this proposed amendment to PHL 45-A was consistent with a trend in 15 other states to enhance scrutiny over healthcare transactions to (1) ensure that healthcare providers remain in control of the practice of medicine without interference or influence by corporate owners/investors (consistent with NY’s historical “corporate practice of medicine” prohibition) and (2) ensure that the quality, accessibility and cost of healthcare services will not be negatively impacted by corporate transactions, with a specific focus on private equity investments which were the subject of scathing federal agency reports under the Biden administration.

Just last week, we learned that this proposed amendment to PHL 45-A was dropped from the final 2025/2026 NYS budget legislation following significant opposition from members of the healthcare community, based on concerns that it would discourage healthcare investments in the state, potentially stifling innovation and competitiveness. Notably, in California – another highly regulated “corporate practice of medicine” state – similar legislation was proposed and rejected by Gov. Gavin Newsome in September 2024.

The failure to include these new provisions is somewhat contrary to the current nationwide trend of increased scrutiny by state regulators over healthcare transactions and may, in fact, encourage more private equity and other investments in the state (we are aware that many investors shied away from NY due to regulatory oversight concerns). However, we want to be sure that stakeholders understand that (1) the prior notice law, including recent guidance discussed here, remains in effect which could (although has not to date) lead to Health Department intervention and (2) the corporate practice of medicine restrictions in NYS remain in effect, and healthcare transactions and corporate entities need to be structured carefully to be legally compliant.

We will continue to keep you posted about this dynamic area of the law and welcome any inquiries you may have.