Overview
On January 20, 2026, New York Governor Kathy Hochul introduced legislation that would significantly modify New York’s material transaction notice requirements for certain healthcare transactions. The proposed legislation would add new disclosure obligations, introduce a deeper review process, and require multiyear reporting after a transaction closes. A final decision on the legislation will likely be made in April or May 2026. If passed, the new requirements would take effect in one year.
Why it matters
- The proposed legislation would create uncertainty around closing timeframes, potentially delaying transaction closings by months.
- The regulatory notice and review process would become more complex and burdensome for transacting parties and their affiliates.
- New disclosures would be required from certain investors in healthcare entities, both in connection with the transaction and for years thereafter.
In Depth
Preliminary review and additional disclosures
Currently, the New York material transactions law does not expressly require or authorize the New York State Department of Health (DOH) to review notices of material transactions involving healthcare entities beyond evaluating the completeness of the notices. The governor’s proposed legislation would require DOH to conduct a “preliminary review” of material transactions and allow DOH to require any “party to a transaction” or “person with control” over such a party to submit additional documents and information as may be necessary to assess the transaction and its impacts, or to verify the information submitted.
The legislation would require two additional disclosures to be submitted along with the initial notice:
- Healthcare entity closures and reductions. A detailed description of any closed operations, closing operations, or substantial reductions in services that occurred at a healthcare entity owned by a party to the proposed transaction, or a person with control of such party, in the past three years.
- Real estate arrangements. Any documents related to any sale-leaseback, mortgage, lease arrangement, or “other payments associated with real estate” that are components of the transaction.
Cost market impact review
If a proposed transaction “is valued at” $100 million or more, the legislation would authorize DOH to perform a cost and market impact review (CMIR) of the transaction and to require the parties to delay the transaction closing for up to 180 days after DOH completes its preliminary review. The legislation would also authorize DOH to perform a CMIR if it “reasonably believes” that a transaction may negatively impact cost, quality, access, health equity, or competition, even if the transaction “is valued at” less than $100 million.
The calculation of the proposed CMIR threshold differs from the existing measurement for “de minimis” transactions. Whereas the current $25 million de minimis threshold is measured based on the increase in gross in-state revenue by a healthcare entity, the proposed $100 million threshold for a CMIR would instead be based on how “the transaction is valued,” which is undefined and unexplained in the legislation.
Five-year annual reporting
The legislation would require the “parties to a material transaction” to notify DOH annually for five years post-closing of certain factors and metrics necessary to assess the transaction’s impacts on cost, quality, access, health equity, and competition. DOH may require additional information from the transacting parties or entities that control the “parties to the transaction,” as well as persons with control over a “transaction party.” As proposed, the annual reporting requirement would be retroactive to all historic material transactions that have been reported since the inception of the original material transactions law.
Key takeaways
- The governor’s proposals will be subject to months of legislative scrutiny and may be amended or rejected by the New York legislature.
- If the legislation is enacted as proposed, DOH would have greater authority to scrutinize material transaction notices before deeming them complete, potentially delaying the notice and closing processes.
- Given the lack of clarity in key terms and concepts in the proposed legislation, stakeholders would need to interpret the terms and concepts themselves until DOH issued regulations or guidance setting forth its interpretations. That process could take months or years.
- Under the legislation, controlling affiliates of healthcare entities (including certain owners of physician management services) would be subject to certain disclosure requirements.
- If the new CMIR threshold is enacted, it would significantly delay large transactions ($100 million or more) and add greater uncertainty around closing timelines for smaller transactions. The New York State Legislature rejected the governor’s similar CMIR proposal last year.
We will continue to monitor the process and provide updates as they become available. If you have questions or would like to discuss any issues related to this proposed legislation, contact your regular McDermott Will & Schulte lawyer or one of the authors.
Olivia Andrews and Ashley Anumba, law clerks in the New York office, also contributed to this article.