Healthcare M&A has always been complex because of the highly regulated nature of the industry. In recent years, a new category of state-level oversight has emerged that is changing how deals move forward in the middle market. State material healthcare transaction review laws, commonly referred to as TRLs, are reshaping timelines, increasing costs, and demanding a level of transparency that sponsors and strategic acquirers have not previously encountered.

For healthcare dealmakers, understanding TRLs has become a front-end diligence and structuring issue, not a back-end compliance exercise.

A New Layer of Oversight Beyond Licensure and Antitrust

TRLs are state statutes that require advance notice to, or pre-closing approval from, a state regulator before certain healthcare transactions can close. They represent a layer of oversight that goes beyond traditional licensure change of ownership and antitrust enforcement.

While federal Hart-Scott-Rodino filings have long been a feature of larger deals, TRLs capture transactions that often fall well below the HSR thresholds, encompassing the kinds of acquisitions and affiliations common in middle-market healthcare. In most states with TRLs, the review is often in addition to and not in lieu of change of ownership licensure filings.

TRLs evaluate how a proposed transaction will affect cost, quality, access, competition, and, in some cases, health equity in the communities served. Many states have modeled their frameworks on the National Academy for State Health Policy’s Model Act for State Oversight of Proposed Health Care Mergers.

As of mid-2026, more than 13 states have enacted or are actively implementing TRLs, with several more considering legislation. States with active frameworks include California, Connecticut, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Washington, and others.

Broad Definitions Cast a Wide Net

Most TRLs define the covered event as a “material transaction” or a “material change.” The definitions are broad and vary across jurisdictions. The trigger can include not only traditional mergers and acquisitions, but also affiliations, management services arrangements, joint ventures, and the formation of new entities.

Some states, such as Connecticut and Rhode Island, have no financial thresholds at all—any covered transaction triggers the requirement. Others set minimum revenue or asset levels. New York, for example, uses a $25 million gross in-state revenue threshold for its notice requirement. California applies both revenue-based thresholds and a separate track for transactions involving changes in ownership, operations, or governance regardless of dollar value. Indiana requires notice when one party has at least $10 million in total assets.

A notable feature of many TRLs is how they capture not just changes in ownership, but effective control. A management services agreement that transfers operational authority over a practice may itself constitute a material change under certain state definitions, even if no equity changes hands.

Coverage Extends Beyond Traditional Healthcare Services

Almost all states include hospitals, hospital systems, and physician group practices in those entities covered by a TRL. But the scope extends further in many jurisdictions.

Certain states cover management service organizations, accountable care organizations, pharmacy benefit managers, health insurers, and Medicare Advantage plans. Indiana’s law, for example, explicitly includes private equity partnerships entering into transactions with healthcare entities.

Notice vs. Approval—and What That Means for Timelines

TRLs fall along a spectrum from simple notice to full pre-closing approval. New York requires 30-day pre-closing notice to the Department of Health, which then forwards the filing to the attorney general’s office. The state does not approve or disapprove of the transaction. Washington requires 60-day pre-closing notice to the attorney general and, under recent legislation signed in March 2026, has expanded the scope of reportable transactions.

On the other end of the spectrum, Oregon requires notice 180 days before closing and has the authority to conduct a comprehensive review that can extend to 180 additional days. If approved, the Oregon Health Authority monitors the transaction’s effects for up to five years. California’s Office of Health Care Affordability has 60 days to decide whether to conduct a full cost and market impact review, which can extend the process to over 200 days. Massachusetts recently expanded its framework, and its Health Policy Commission can extend pre-transaction review to 215 days.

Even in states with straightforward notice requirements, regulators frequently request supplemental information, which resets or extends timelines. Parties should plan for timelines materially longer than what traditional deal planning would suggest.

The Private Equity Dimension

A number of TRLs have been enacted or expanded with private equity involvement as a specific policy focus.

States are requiring more detailed ownership disclosures, scrutinizing management structures that may confer influence without full ownership, and in some cases explicitly targeting PE-backed roll-up strategies.

California’s AB 1415, effective January 2026, expanded notice requirements to explicitly include private equity firms, hedge funds, and MSOs. Rhode Island’s Pre-Merger Notification Rule for Medical-Practice Groups, effective January 2026, creates new obligations to report transactions involving MSOs and private equity investments, with fines of up to $100,000 for failure to provide notice. Oregon’s SB 951, effective June 2025, restricts MSO and PE control of healthcare practices.

Some TRLs also require public disclosure of ownership information and equity structures, which can conflict with confidentiality provisions in fund agreements.

Practical Considerations for Dealmakers

The growing patchwork of TRLs introduces practical challenges, and there are steps PE dealmakers should take to prepare.

• Know the rules early. State agency filings analysis must happen early, ideally during preliminary diligence rather than after signing. The scope of covered entities and transactions varies enough across states that a transaction touching multiple jurisdictions may trigger different requirements in each.

• Budget for increased costs. Parties should anticipate increased costs associated with preparing detailed applications, responding to supplemental information requests, and retaining local counsel in multiple jurisdictions.
• Prepare for transparency. Many TRLs require public disclosure of transaction documents and organizational structures, and some states post summaries of proposed transactions on public websites for comment. Parties should understand what protections, if any, are available for confidential business information and know that in many states, such protections must be affirmatively requested.
• Engage regulators proactively. Complete applications and proactive engagement with state regulators can reduce follow-up requests and produce more predictable timelines. Regulators expect parties to articulate how a transaction will affect provider availability, service continuity, and competition in local markets.

The Trend Is Accelerating

The trend line is clear: more states are enacting TRLs, existing frameworks are expanding, and the level of disclosure and review is increasing. Several states, including Iowa, Maryland, Pennsylvania, Vermont, and Hawaii, have pending legislation that would create new or broader review requirements.

For healthcare dealmakers, the message is straightforward: TRLs are not going away, and the trend favors more oversight, not less. But for those accustomed to this level of regulation, TRLs should feel like a natural extension of the landscape. Healthcare dealmakers routinely navigate complex licensure frameworks, certificate of need processes, fraud and abuse laws, and other requirements. TRLs add a new dimension to that landscape, but the core competency, understanding the regulatory environment and planning around it, is the same.

Sponsors and advisors who integrate TRL analysis into deal planning from the outset, treating it as a strategic consideration that shapes structure, timing, and execution, will be well positioned to transact efficiently.

Ari J. Markenson, JD, MPH, is a healthcare and corporate partner at Venable LLP. Ari, a 2026 Crain’s New York Notable Leader in Healthcare, has spent his 25+-year legal and academic career at the intersection of healthcare, law, and business. He regularly advises investors and lenders on complex healthcare transactions. He is a member of ACG New York.

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