Overview
On January 28, 2026, the Rhode Island Attorney General (AG) made effective the new Pre-Merger Notification Rule for Medical-Practice Groups. While Rhode Island has historically required pre-closing approval by both the AG and the Rhode Island Department of Health (DOH) for certain hospital transactions under the Hospital Conversion Act, the new rule requires pre-closing notification to the AG for certain transactions affecting medical-practice groups, including those involving private equity investors and management services organizations (MSOs). The AG promulgated this new rule under its regulatory and antitrust authorities. According to the AG, the increasing influence of consolidation and private equity in the healthcare sector drove the rule’s adoption. It is intended to prevent excessive market consolidation, slow healthcare cost growth, and safeguard the quality of care.
Key takeaways
- Written notice to the AG is required no later than 60 days prior to the effective date of any transaction involving a medical-practice group that results in a material change, including any merger, consolidation, or acquisition that would result in ownership or control by a private equity company, or the formation of an MSO or similar contracting entity responsible for administering a medical‑practice group’s contracts with health insurance carriers or third‑party administrators.
- Failure to comply with the rule will result in monetary penalties, including a per-day fine and up to $100,000 for failing to provide notice by the transaction’s effective date.
- The AG may also seek to enjoin a transaction until the parties have provided the 60-day pre-closing notice.
In Depth
Analysis
The rule creates new obligations to report transactions involving MSOs and medical-practice groups in Rhode Island, including private equity investments.
Material change notice requirements
Under the rule, written notice to the AG must be provided no later than 60 days before the effective date of any material change to the business or corporate structure of a medical-practice group (i.e., a physician group practice in any organizational form). The rule requires notification to the AG when:
- A transaction involving a significant equity investor results in the change of ownership or control of a medical-practice group; or
- An MSO or other entity is formed for the purposes of current or future contracting on behalf of one or more medical-practice groups.
A reportable material change also occurs when a medical practice group merges; consolidates or affiliates with; sells all or substantially all of its properties, assets, or equity interests to; or has all or substantially all of its physicians employed by:
- A hospital, hospital system, captive professional entity, medical foundation, or other entity organized or controlled by a hospital or hospital system; or
- Another medical-practice group that results in a group of eight or more physicians, physician assistants, or nurse practitioners.
Under the rule, “significant equity investor” targets private equity investors that have a direct or indirect “financial interest” in a medical-practice group or MSO, and any other investors that have direct or indirect ownership or possession of equity in the capital, stock, or profits totaling more than 10% of a medical-practice group or MSO.
Notice submission for organizations undergoing a material change
The AG published a notice of material change form on its website. Parties to a transaction must complete, sign, and submit the form via email to HCMaterialChange@riag.ri.gov no later than 60 days before the effective date of any transaction resulting in a material change. The form requires information about both parties, the nature and purpose of the proposed transaction, and any changes contemplated from the transaction, as well as a description of the anticipated impact of the proposed material change, such as any impact on reimbursement rates, care referral patterns, access to healthcare services, and quality of care. These materials are protected from disclosure to the public unless the AG determines disclosure is necessary for enforcement purposes.
The AG is not required to respond to a submission but may contact the filer if it requires additional information. Once the filer submits the form, the filer must notify the AG of any updates to the information provided in the form within 10 business days of any such update.
Penalties for failure to comply with notice requirements
The rule imposes penalties of up to $200 per day for failure to provide the required 60‑day pre‑closing notice prior to the transaction’s effective date. A penalty of up to $100,000 also may be imposed if notice has not been provided by the transaction’s effective date. Depending on when notice is ultimately provided, one or both penalties may apply.
The AG may also seek injunctive relief to delay or enjoin the finalization of any proposed transaction subject to the rule until the parties to the transaction have provided pre-closing notice of at least 60 days.
Proposed legislation
In parallel to the rule, Rhode Island lawmakers introduced House Bill (H.) 7172, the Health Care and Social Services Transaction Review and Significant Equity Investor Disclosure Act, on January 21, 2026. This legislation also aims to enhance disclosure for material changes 60 days prior to a transaction involving significant equity investors but differs from the rule in several ways. The proposed legislation would require additional provider types (licensed healthcare facilities and providers, as well as various types of behavioral health organizations such as residential programs and group homes) to provide notice of additional types of transactions to both the AG and DOH.
Interested parties seeking to transact within Rhode Island’s healthcare landscape should closely monitor developments related to this pending legislation as the definition of “material change” would subject certain private equity investments in healthcare, and behavioral health in particular, to new notice requirements.
The rule and H.7172 are part of a growing trend, and private equity investors and other parties transacting in the state should take note of increasing momentum to reshape private investment in healthcare in Rhode Island and across the United States. Visit McDermott Will & Schulte’s Health Transactions Resource Center to monitor developments.