State of the states: Avoiding healthcare transaction pitfalls in 2026

Current law requires advance notice for certain provider and facility transactions. Proposed legislation introduced in 2026 would broaden the scope of reportable transactions and increase disclosure expectations related to ownership structures and affiliation arrangements. In certain circumstances, this may include MSO-to-MSO transactions.

Illinois regulators are also signaling closer scrutiny of private equity-backed roll-up strategies and MSO models, particularly where control and influence over clinical operations may be implicated.

Indiana lawmakers have expressed concern over healthcare consolidation and costs in the state, leading to the passage of a healthcare transaction reporting requirement in 2024. The AG’s office requires notification of certain types of healthcare transactions involving Indiana healthcare entities, including where an Indiana healthcare entity is being acquired by a private equity investor, where one party has at least $10 million dollars in total assets. The Indiana AG requires notice at least 90 days prior to the closing, and a copy of the HSR is required as part of the submission, requiring close coordination of timeframes with the federal filing requirements.

Legislation advancing in 2026 would require parties submitting federal HSR filings to provide copies of those filings to the Indiana AG when transactions meet state nexus thresholds. Similar to frameworks already implemented in Washington and Colorado, these requirements do not impose independent waiting periods but expand early regulator visibility and facilitate multistate coordination.

Minnesota includes a dual-track review system for certain acquisitions of healthcare entities, including healthcare provider group practices. For transactions where the healthcare entity involved has average trailing 12-month revenue greater than $10 million, but less than $80 million, a more streamlined notice filing is permitted. For transactions where the healthcare entity involved has average trailing 12-month revenue greater than $80 million, a more comprehensive 60-day review is required.

The applicability of the revenue thresholds should be determined early in the transaction process to avoid delays.

Massachusetts

Massachusetts continues to shape the regional oversight environment.

Effective April 8, 2025, HB 5159 expanded the definition of “material change” to capture a broader set of transaction types, including private equity investments and real estate sale-leaseback arrangements. The expansion means more deals are subject to advance notice to (and potential extended review by) the Massachusetts Health Policy Commission, which may extend transaction timelines substantially.

Draft regulations issued in March 2026 further lowered thresholds for reporting certain types of acquisitions and expanded definitions to explicitly include pharmacies as providers that could be subject to the requirements.

Rhode Island

Across the broader New England region, Rhode Island’s transaction notice regimes are being expanded, affecting provider affiliations and consolidation activity.

On January 28, 2026, Rhode Island’s Pre-Merger Notification Rule for Medical-Practice Groups went into effect, which creates new obligations to report transactions involving MSOs and medical-practice groups, including private equity investments.

Also in January 2026, Rhode Island House Bill 7172 was introduced to expand notice requirements to more provider types, including facilities and behavioral health organizations, while covering a broader range of transactions.

Connecticut

Connecticut’s healthcare transaction framework continues to center on its “material change” notice regime. This update requires advance notice to the Office of the Attorney General and Office of Health Strategy for certain hospital, hospital system, and physician practice transactions, as well as other transactions involving healthcare entities that are party to a transaction where an HSR filing is required.

Recent legislative proposals would expand the scope of reportable transactions to include a broader range of healthcare entities, such as MSOs, outpatient facilities, and behavioral health providers, while extending notice periods and capturing serial or affiliated transactions.

Regulators are also placing greater emphasis on private equity involvement and management structures that may confer influence without full ownership, alongside maintaining authority to conduct cost and market impact reviews that can extend beyond closing.

Connecticut

Connecticut’s healthcare transaction framework continues to center on its “material change” notice regime. This update requires advance notice to the Office of the Attorney General and Office of Health Strategy for certain hospital, hospital system, and physician practice transactions, as well as other transactions involving healthcare entities that are party to a transaction where an HSR filing is required.

Recent legislative proposals would expand the scope of reportable transactions to include a broader range of healthcare entities, such as MSOs, outpatient facilities, and behavioral health providers, while extending notice periods and capturing serial or affiliated transactions.

Regulators are also placing greater emphasis on private equity involvement and management structures that may confer influence without full ownership, alongside maintaining authority to conduct cost and market impact reviews that can extend beyond closing.

Legislation introduced in January 2026 would significantly expand the state’s material transaction notice requirements by introducing additional disclosure obligations, expanding review authority, and requiring multiyear reporting following closing. If enacted, these changes would take place within one year and represent a meaningful shift toward regulatory engagement timelines extending beyond transaction close.

Evolving Medicaid enrollment requirements and heightened oversight of provider participation in managed care networks are also creating additional complexities. Changes in ownership or control may trigger Medicaid re-enrollment, plan consent, or network participation reviews, and increased scrutiny of value-based arrangements and reimbursement structures can affect post-closing integration plans and financial performance.

Oregon’s Health Care Market Oversight (HCMO) program is one of the most comprehensive transaction review frameworks in the country, requiring a detailed application – and that a significant number of transaction documents be provided. This adds cost and lengthens the pre-closing process. Covered transactions are evaluated for competitive impact as well as affordability and access. Further, we have observed HCMO granting approval on a conditional basis, with certain approvals requiring up to five years of follow-up.

Oregon also has a broad “public interest” standard. Regulators closely evaluate transactions involving private equity sponsors and out-of-state investors, focusing on arrangements that may affect pricing, service, or workforce stability. Oregon regulators also value transparency in the application process: They require documentation and information to be made available to the public unless the applicant provides a basis for protecting this information under applicable laws.

Action steps for healthcare sponsors in 2026

Across jurisdictions, regulators are increasingly evaluating not only whether transactions affect competition, but how they affect access, affordability, and care delivery at the local market level. Sponsors pursuing healthcare transactions in 2026 should consider the following practical steps.

Develop a clear competitive landscape narrative early:

A well-developed competitive positioning narrative can significantly reduce follow-up information requests during review. Regulators expect investors to be able to articulate how a transaction fits within the local competitive environment.

Sponsors should be prepared to explain how a proposed acquisition affects provider availability, referral dynamics, and service continuity within specific geographic markets.

Prepare an access-to-care and quality-of-care impact framework:

State reviewers are placing greater emphasis on whether transactions affect patient access, service availability, and clinical quality. Parties must be able to demonstrate that a transaction will support continued availability of services and strengthen care delivery infrastructure without thwarting competition in affected regions.

Evaluate physician practice management structures carefully:

CPOM alignment remains a priority issue and should be evaluated alongside ownership disclosures during early structuring rather than late in execution planning. Sponsors should assume MSO governance structures may be reviewed as part of broader transaction transparency expectations.

Build a defensible five-year post-close integration strategy:

Forward-looking integration strategy has become a core component of transaction credibility. Regulators increasingly expect parties to explain not only the purpose of a transaction but also how the platform will evolve post-close. Certain states have focused on the amount of debt taken on by the provider entities as part of the transaction, with an eye toward long-term stability of the provider’s finances and continued ability to operate.

Sponsors should be prepared to describe how integration planning supports both operational performance and continued delivery of high-quality patient care over time.

Align economic projections with care delivery strategy:

Financial projections are being evaluated alongside workforce planning, service-line strategy, and patient access considerations. Sponsors should ensure that modeled efficiencies and synergies are consistent with expected service continuity and clinical operations planning.

Prepare transaction documentation with regulatory visibility in mind:

Early alignment between antitrust counsel, regulatory counsel, and deal teams is critical. Sponsors should assume all transaction materials may be reviewed by regulators.

Documentation should clearly describe pro-competitive objectives, be mindful of market-share characterizations, and ensure consistency between business strategy narratives and financial modeling assumptions.

Assess confidentiality and strategic exposure implications:

Expanded notice regimes increase transparency into transactions earlier in the execution process. Sponsors should consider how disclosure and reporting obligations may lead to interim impacts (that is, pre-close) because of increased visibility from other platform operators in the same service areas.

Sponsors should also evaluate sequencing strategies early to reduce the likelihood of staggered regulatory timelines that can delay closing. This consideration is particularly important for multistate platform roll-up strategies.

State oversight of healthcare transactions is accelerating. For the latest developments and practical guidance, visit the McDermott Health Transactions Law Center.