Arindam Kar: The FTC – Antitrust Scrutiny: PE firms are facing an unprecedented level of antitrust scrutiny. This scrutiny reflects a “whole-of-government” approach by the Biden Administration to have federal agencies actively collaborate and use the traditional antitrust laws, other regulations that impact competition, and use them as a tool to address systemic concerns in our economy. So, for example, earlier this year it was announced that the Antitrust Division of the U.S. Department of Justice, the Federal Trade Commission, and the Department of Health and Human Services were working together to tackle “Corporate Greed in Healthcare” by issuing a public request for information to identify instances where private equity in healthcare has led to anticompetitive conduct, effects, and/or harm to patients. This information would help the agencies conduct investigations in the industry.

BG: In addition, the FTC has indicated that when a proposed private equity transaction in healthcare requires a filing under the Hart-Scott-Rodino Act (HSR – typically when a transaction is larger than approximately $119.5 million), the FTC can look back at all prior transactions in the last 10 years by the parties to see if there has been an anticompetitive effect, essentially putting those prior transactions at risk of challenge. Further, following the Change Healthcare data breach, the FTC has indicated that it will look at whether a healthcare transaction is likely to make healthcare data more or less secure.


Two: CMS – Medicare Change of Ownership – CMS has new rules regarding Medicare participation that require disclosure of “additional disclosable parties” – which includes landlords, lessors, and anyone providing management or financial or clinical services. The rules require disclosure of individuals holding (directly or indirectly) at least 5% of the ownership of those additional disclosable parties, and the data will eventually be published. The rules are primarily for nursing homes, but they also reach a number of other healthcare providers. They can be problematic for private equity, as they could require private equity funds to reveal any actual investors holding more than 5% of a fund.

Three: State legislatures passing transaction pre-notification laws – There are now 13 states with laws that require pre-notification of healthcare transactions. The timing for the notices typically runs from 1-4 months, with Oregon’s statute requiring six months pre-notification. The state laws vary as to how they define healthcare transactions, but the result is a simple one – healthcare transactions will take more time and be subject to more scrutiny before parties can consummate deals.

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