As we reported in a previous client alert, effective January 1, 2024, the IL AG began overseeing a broad array of transactions that involve healthcare entities. Under the Illinois Antitrust Act, any “covered transaction” between two or more healthcare facilities or provider organizations not previously under common ownership or contracting affiliation must provide at least 30 days’ notice to the IL AG before closing.

The proposed legislation would broaden the existing definition of “covered transaction” by replacing “between” with “involving.” This change is intended to capture transaction structures where the parties to the transaction are not themselves healthcare facilities or provider organizations, but the transaction nonetheless results in a change of control or common ownership of a healthcare facility or provider organization. By extending notice obligations to indirect owners, the changes proposed by the bills could increase transparency expectations and introduce new timing considerations for parties to covered transactions.

The proposed legislation would require notice not only from healthcare facilities and provider organizations, but also from entities that own or control, directly or indirectly, one or more of the healthcare facilities or provider organizations that would be under common ownership or affiliation following the transaction. The parallel bills explicitly contemplate transactions involving private equity companies.

The proposed legislation defines a “private equity company” as an entity that pools capital and acquires ownership interests, directly or indirectly, in Illinois healthcare entities, as well as in out-of-state healthcare entities that generate $10 million or more in annual revenue from patients that reside in Illinois.

The proposed legislation also introduces definitions for two undefined terms in the current notification statute:

• “Health care provider” means an individual or entity duly licensed or legally authorized to provide healthcare services.
• “Health care services” means healthcare services or products rendered or sold by a healthcare provider within the scope of the healthcare provider’s license or legal authorization. The term includes, but is not limited to, hospital, medical, surgical, dental, vision, and pharmaceutical services or products.

These new definitions would likely expand the types of reported transactions.

Even though the bills would not revise the “provider organization” definition, the new terms could indirectly influence how that definition is applied, particularly with regard to the concept of being in the “business of health care delivery or management.” By tying “health care services” explicitly to services or products rendered within the scope of a healthcare provider’s license, the bills could influence how parties and regulators assess whether certain arrangements fall outside the statute, particularly where parties might otherwise rely on “nonclinical” characterizations.

If either bill is enacted as proposed, the January 1, 2027, inoperative/repeal date affecting both the notice provisions and certain related change-of-ownership provisions would be removed, thereby extending the reporting framework beyond 2026.

The proposed bills would not add any framework for the scope of additional information that can be requested of the parties to a transaction or limit the time period in which a transaction can be effectively tolled.

If enacted, the changes to Illinois’ healthcare transaction reporting framework contemplated by the bills would apply to a broader segment of transactions, thereby requiring further analysis as part of deal planning and assessment of impact on transaction timelines, particularly for transactions involving layered ownership or nontraditional healthcare structures. The provision of the required notice to the IL AG is merely the beginning of the review process for a covered transaction, and if either of these bills is passed into law, that review would apply to additional Illinois healthcare transactions.

For more information or for assistance with HB5000 and SB3463, please contact the authors.