As part of a considerable shift in the legislation landscape, a new Indiana law scheduled to go into effect on July 1 will impose notable demands on the state’s health-care mergers and acquisitions (M&A). This change will necessitate evidence of thorough planning and advanced foresight from those undertaking possible M&A endeavors, thus ensuring a smooth and lawful transaction.
With an aim to regulate costs by monitoring potential antitrust issues and maintaining competition, the law mandates health care institutions to notify the state attorney general at least 90 days prior to officially concluding specific transactions. The Indiana law echoes a growing trend, with several states enacting similar disclosure requirements. However, Indiana’s legislation comes with unique features, such as the inclusion of private equity partnerships in its covered entities and definitions, which is likely to raise concerns for long-term care providers.
Interestingly, the Senate Enrolled Act 9 amends the Indiana Code Section 4-6-3-6 and has a sweeping application to any merger or acquisition involving health-care entities. Additionally, the law is applicable to a variety of health-care entities such as:
- Organizations or businesses offering diagnostic, medical, surgical, or dental treatment, or rehabilitative care
- Insurance providers, pharmacy benefit managers, and health maintenance organizations
- Private equity partnerships looking to undergo a merger or acquisition with an entity that falls under the law
The criterion for notifying the attorney general is if an Indiana health-care entity enters into a transaction with another health-care entity which has total assets—including combined entities and holdings—of at least $10 million. Consequently, entities should prepare well in advance, considering how the answers to these questions may affect their operations. Moreover, they should contemplate what information they will need to disclose and how the law could impact the timeline of a transaction. It will require extended timelines and increased costs to accommodate the submission process and the attorney general’s review. Establishing ways to ensure the confidentiality of sensitive information that may be included in the required notice is another aspect to consider.
Given its wide-ranging impacts, this new Indiana law presents some challenges and questions for Indiana health-care entities. Among the factors to be considered include:
- Does an Indiana health-care entity require a physical presence within the state or a license by the Indiana Department of Health or another state agency?
- How is the $10 million asset threshold calculated and applied?
- What happens if the attorney general doesn’t send written notice of antitrust concerns?
- Is providing notice 90 days prior enough to fulfill the requirements of the law?
- How does this new requirement influence transactions closing in 2024, and will there be a transitional period after July 1?
Quarles & Brady’s Jaya White and Randall Fearnow offer detailed insight on the implications of this new legislation. Find out more valuable pointers in their comprehensive discussion on Bloomberg Law.