Illinois Proposes Heightened Oversight for Healthcare Transactions

Beginning January 1, 2024, healthcare amenities and supplier organizations participating in sure transactions in Illinois, equivalent to mergers and acquisitions, could have new reporting necessities. Illinois lately joined a rising variety of states, together with California and New York, in requiring expanded oversight and transparency of transactions involving healthcare amenities and supplier organizations. Illinois’ Public Act 103-0526 (the “Act”), enacted in August 2023, amends the Illinois Antitrust Act, the State Finance Act and the Illinois Well being Amenities Planning Act to extend oversight by the Illinois Lawyer Common’s (the “IL AG”) of sure “lined transactions” for healthcare amenities and supplier organizations.

Overview and Noteworthy Takeaways

The Act supplies further reporting and assessment necessities for healthcare amenities and supplier organizations in reference to sure transactions, requiring them to:

1. Present 30 days’ prior discover to the IL AG of any merger, acquisition or contracting affiliation for any entity not beforehand beneath widespread possession or contracting affiliation (every a “Coated Transaction”) (together with Coated Transactions with any out of state entity producing $10 million + in annual income from Illinois residents);
2. Present the IL AG with a duplicate of any premerger notification submitted to the federal authorities in reference to the necessities beneath the HSR Act;
3. Present simultaneous discover to the IL AG in reference to the finished change of possession software submitted to the Illinois Well being Amenities and Providers Evaluate Board (the “IL Evaluate Board”); or
4. Notify the IL AG of any Coated Transaction not captured at gadgets (2) and (3) above, and embrace particulars in such discover as described within the Act.

Failure to satisfy the discover necessities of the Act might lead to day by day fines of $500 to healthcare amenities and supplier organizations for violations of the reporting necessities, as detailed under. 

Amendments to the Illinois Antitrust Act

By the use of background, the Illinois Antitrust Act, enacted in 1965, dietary supplements the federal anti-trust legal guidelines in securing the advantage of free and open competitors to Illinois companies and customers. Below Illinois regulation, a personal lawsuit could also be filed towards a celebration for an alleged antitrust violation on the similar time a federal motion is pending. In its present type, the Illinois Antitrust Act, supplies the IL AG with the authority to convey motion on behalf of a personal occasion because of sure mergers and acquisitions that present grossly unfair benefits to giant enterprise entities to the detriment of customers. The Act consists of further reporting necessities beneath the Illinois Antitrust Act, requiring entities to offer 30 days’ prior discover to the IL AG in reference to any Coated Transactions. The added discover requirement would come with any Illinois healthcare facility or supplier group in search of to contract with an out of state entity producing no less than $10 million or extra in income from Illinois residents. 

The Act’s definition of “healthcare amenities” consists of:

• Ambulatory surgical therapy facilities;
• Hospitals and different amenities licensed beneath the Hospital Licensing Act;
• Kidney illness therapy facilities; and
• Outpatient surgical facilities.

The Act defines a “supplier group” as any company, partnership, enterprise belief, affiliation or organized group of individuals whether or not integrated or not, within the enterprise of healthcare supply or administration, that represents 20 or extra healthcare suppliers in contracting with well being carriers or third-party directors for the fee of healthcare providers. The definition consists of:

• Doctor organizations;
• Doctor-hospital organizations;
• Impartial observe associations;
• Supplier networks; and
• Accountable care organizations.

Additional, beneath the Act, a “contracting affiliation” would come with the formation of a relationship between two or extra entities that allows the entities to barter collectively with well being carriers or different third occasion directors over charges for skilled medical providers, or that allows an entity to barter on behalf of the opposite entity with well being carriers or third-party directors over charges for skilled medical providers. Contracting affiliations don’t embrace preparations amongst entities beneath widespread possession.

The Act requires any healthcare facility or supplier group that could be a occasion to a Coated Transaction and is required to file a premerger notification beneath the HSR Act to concurrently present a duplicate of the submitting to the IL AG. The place a Coated Transaction doesn’t require submitting beneath the HSR Act, the healthcare facility would nonetheless have to fulfill its discover obligations to the IL AG by submitting for a change of possession with the IL Evaluate Board in compliance with the Illinois Well being Amenities Planning Act. The IL Evaluate Board would then present a duplicate of the submitting to the IL AG on the similar time such discover is offered to different shareholders, as required beneath Part 8.5(a) of the Illinois Well being Amenities Planning Act. 

As well as, any entity that could be a occasion to a Coated Transaction that’s not topic to the submitting necessities beneath the HSR Act or the change of management submitting with the IL Evaluate Board might want to present written discover to the IL AG, together with (i) the names and enterprise addresses of the events, (ii) the identification of all areas the place every occasion at the moment supplies healthcare providers, (iii) an outline of the character and goal of the transaction, and (iv) the efficient date of the proposed transaction. Inside 30 days’ of receipt of the discover, the IL AG might request further info from the events and the Coated Transaction might not proceed till 30 days’ after the events have “considerably complied” with the extra request from the IL AG. Any failure to adjust to the discover necessities or requests for extra info might lead to a day by day penalty of $500 for every day of noncompliance, after a ten day treatment interval. 

Extra Amendments beneath the Illinois Finance Act and Well being Amenities Planning Act

Part 8.5(a) of the Illinois Well being Amenities Planning Act requires healthcare amenities to acquire a certificates of exemption from the IL Evaluate Board in reference to any deliberate change in possession by submitting an software which particulars the phrases of the proposed transaction. As mentioned above, the Act amends Part 8.5(a) of the Well being Amenities Planning Act to incorporate further discover to the IL AG upon completion of the change in possession software. 

The Act additionally amends the Illinois Finance Act to incorporate a brand new antitrust enforcement fund for use by the IL AG for enforcement of the Illinois Antitrust Act.

Extra Concerns for Well being Amenities and Supplier Organizations

The Act raises considerations for delays within the closing course of for Coated Transactions. The added reporting necessities and IL AG assessment course of create the potential for a further 90 day extension in healthcare transactions and failure to offer well timed discover might lead to penalties. The shortage of readability within the requirement for “substantial compliance” with further inquiries from the IL AG, and the added energy of the IL AG to hunt a short lived restraining order or injunctive reduction for noncompliance, create additional prospects for closing delays. Healthcare amenities and supplier organizations ought to spend further time consulting with their authorized counsel in figuring out one of the best path ahead with regard to transaction benchmarks and a timeline for making the required filings with the IL AG and the related Illinois authority.