Maine Legislature Introduces Bill to Increase Oversight of Proposed Health Care Transactions

Continuing a trend of states attempting to exert additional oversight on transactions in the healthcare space, on March 27, 2023, the Maine legislature introduced H.B. 894, a bill that would increase state oversight of proposed transactions involving healthcare entities licensed in Maine. Importantly, the proposed legislation would cover transactions involving Maine “health care entities” (defined to include healthcare providers, facilities, and provider organizations licensed in Maine), as well as private equity groups and hedge funds (which are not further defined) acquiring such Maine healthcare entities. The bill requires healthcare entities licensed in Maine to provide written notice to the state Attorney General of its intent to enter into a “material change transaction” at least 60 days prior to making any commitment to enter into the transaction. Under the proposed legislation, a healthcare entity licensed in Maine may not enter into a material change transaction unless such transaction is approved by the Attorney General.

The bill defines “material change transaction” to include

1. corporate mergers including one or more healthcare entities
2. acquisitions of one or more healthcare entities
3. any arrangement or contract that results in a change of control
4. the formation of a parentship, joint venture, accountable care organization, parent organization, or management services organization for the purpose of administering contracts with third parties
5. a sale, purchase, lease, or affiliation that results in a transfer of control over a board of directors for a hospital

Certain transactions involving a clinical affiliation of healthcare entities formed for clinical research, educational, or employment purposes are exempt.

The Attorney General is required to complete a preliminary review of the proposed transaction within 30 days of receiving written notice. Within 10 days of receiving written notice, the Attorney General is required to publicly post the following information regarding the proposed transaction:

1. a summary of the proposed transaction
2. an explanation of the groups or individuals likely to be affected
3. information about the healthcare services currently provided, and commitments by the entity to continue providing those services after the proposed transaction
4. a copy of the written notice and accompanying materials submitted to the Attorney General (required materials to be determined by the Attorney General by rulemaking)
5. the time and location of any public hearing

Certain transactions, including those that will result in the transfer of assets valued at more than $2 million and that will result in a significant change in the market share for healthcare services, will be subject to a more comprehensive review that includes a public hearing and could take well over six months.

This bill follows a similar proposal recently introduced in New York, and as noted above is part of a broader trend among states toward expanding regulatory oversight of proposed healthcare transactions. To date, at least six states (California, Connecticut, Massachusetts, Nevada, Oregon, and Washington) have enacted laws requiring review and/or notice of certain healthcare transactions by a state authority, and we expect this number to grow. Sidley will continue to closely monitor these state-level developments.