As New York’s FY 2026-27 budget process moves from joint legislative hearings that concluded last month into March negotiations, Governor Hochul’s proposal to expand oversight of “material transactions” involving healthcare entities is drawing renewed attention. The proposal, first introduced on January 21, 2026, and now moving in the Executive Budget Article VII legislation (S.9007 B / A.10007 B) (collectively, the “Bill”), would amend Public Health Law § 4552 to broaden pre-closing disclosures, require a Department of Health (“DOH”) preliminary review of all reported transactions, authorize a discretionary cost and market impact review (“CMIR”) in specified circumstances, and impose five years of post-closing reporting. [1]
Taken together, the proposed amendments in the Bill reflect New York’s continued effort to expand oversight of healthcare transactions beyond transparency and notice toward a more active review and monitoring framework. The amendments, if adopted, would take effect on the first anniversary of the date of enactment. [2]
Expanded Pre-Closing Disclosures
Existing law requires healthcare entities to submit written notice of a material transaction at least thirty days before the closing date of the transaction, together with specified supporting documentation, including names of the parties to the transaction, copies of definitive agreements governing the transaction, the locations where healthcare services are currently provided and the revenue generated in the state from such locations, any plans to reduce or eliminate services or participation in plan networks, the proposed closing date of the transaction, and a description of the transaction. [3] In practice, DOH’s Material Transactions Notice Electronic Form Questions are even more detailed, requiring, among other things, copies of financial statements of the parties to the transaction, information regarding principals of the parties to the transaction, revenue projections for the surviving entity, and details regarding the transaction’s anticipated impact on cost, quality, access, health equity, and competition in any impacted New York markets over the next five years. [4] The proposed amendments would add even more disclosure requirements.
First, parties would be required to disclose whether any party to a transaction (or any person with control over a party to a transaction) owns another healthcare entity that, within the past three years, has closed operations, is closing, or has experienced a substantial reduction in services. [5] The statement must identify the affected entities and describe the relevant circumstances.
Second, parties would be required to disclose whether a sale-leaseback agreement, mortgage, lease arrangement, or other payments associated with real estate are components of the proposed transaction and, if so, submit the related documents to DOH. [6]
These additions broaden the information currently required at the outset of the notice process and extend disclosure obligations beyond the immediate transaction parties to persons with control over a party to a transaction.
New Preliminary Review and Cost and Market Impact Review
Under the proposed amendments, DOH would be required to conduct a preliminary review of all proposed material transactions, which review must be completed within thirty days of receiving a complete notice. [7]
Transactions “valued at” $100,000,000 or more may, at DOH’s discretion, be subject to a CMIR following preliminary review. [8] Transactions below this threshold may also be subject to a CMIR if DOH reasonably believes the transaction may negatively impact cost, quality, access, health equity, or competition in impacted markets. [9] The proposed amendments do not articulate the standards DOH will apply in determining whether a transaction “may negatively impact” markets, leaving significant discretion with the agency. If DOH determines that a CMIR is required, it may require the parties to delay closing until the review is completed, but closing may not be delayed more than one hundred eighty days from the date DOH completes its preliminary review. [10]
A notable feature of the proposed amendments is the absence of a defined methodology for calculating transaction value for purposes of determining whether the $100,000,000 threshold is met. This departs from the existing materiality framework, which is measured based on increases in gross in-state revenue. [11] The absence of a statutory valuation methodology introduces uncertainty for transactions involving complex consideration, management arrangements, or multi-entity structures and may require parties to exercise judgment in assessing whether the threshold applies. As DOH eventually did after enactment of the original law, it is reasonable to expect that, if the proposed amendments are adopted, DOH may issue guidance clarifying how transaction value should be calculated.
Five-Year Post-Closing Reporting
Existing law requires the parties to notify DOH upon the closing of the transaction, but the proposed amendments would add a five-year annual reporting obligation as well. [12] For five years following closing, parties to a material transaction would be required, on each anniversary of the closing date, to submit information regarding “factors and metrics” to assess the impacts of the transaction on cost, quality, access, health equity, and competition. [13] DOH may require from any party to a transaction, or any person with control over a transaction party, additional documents and information in connection with the annual report, which must be provided within seven days of request. [14] The scope of any such follow-up requests remains undefined at this stage, leaving uncertainty as to the volume and nature of additional information DOH may require. These provisions would extend DOH oversight beyond pre-closing notice to include ongoing, post-closing monitoring of the transaction’s impacts.
The Bill states that the annual reporting requirement would apply to all material transactions reported to DOH beginning August 1, 2023, raising questions about how the requirement would be operationalized for transactions that closed before the amendments’ effective date. [15] Failure to comply with the law, as amended, would continue to subject parties to civil penalties under the Public Health Law, with each day of noncompliance treated as a separate violation. [16]
Authority to Require Additional Information and Confidentiality
DOH may require any party or any person with control over a party to submit additional documents and information necessary to assess the impacts of the transaction on cost, quality, access, health equity, or competition, or to verify or clarify information submitted pursuant to the statute. [17]
The Bill provides that nonpublic information submitted to DOH remains confidential and exempt from disclosure under the New York State Public Officers Law, but that any information obtained in connection with review, including any CMIR findings and data reported pursuant to the annual reporting requirement, may be used as evidence in investigations, reviews, or other actions by DOH or the New York State Office of the Attorney General, including in certificate of need proceedings submitted by the same healthcare entities involved in the reported material transaction or unrelated parties that are located in the same market area identified in the CMIR. [18] The proposed amendments also authorize DOH to assess on the parties all actual, reasonable, and direct costs incurred in reviewing and evaluating a material transaction notice (without a cap). [19]
Outlook and Practical Considerations
Taken together, these changes would represent a meaningful expansion of both front-end scrutiny and post-closing oversight. On the front end, parties would face broader and more burdensome pre-closing notice obligations, including disclosures relating to prior closures or service reductions (including those of any persons with control over transaction parties) and submission of documentation for transactions with real estate components, likely increasing diligence demands and the risk of DOH follow-up requests. On the back end, the proposed five-year annual reporting obligation would require parties to implement processes to track and substantiate post-closing “factors and metrics” relating to cost, quality, access, health equity, and competition.
These proposed amendments are being considered as part of the State’s budget process and may be amended during legislative review. Notably, a similar cost and market impact review framework was advanced in the prior budget cycle but was not enacted. [20] If adopted largely as proposed, however, the legislation would materially expand DOH’s authority, increase the level and duration of regulatory scrutiny of covered transactions, and introduce greater variability, compliance burdens, and potential delay of healthcare transaction timelines – factors that providers, investors, and management companies may need to weigh not only in structuring and timing New York deals, but also in assessing whether the strategic opportunities presented by transaction activity in the state sufficiently outweigh the additional regulatory burdens.
FOOTNOTES
[2] Id. at § 4552(2) (providing that the act shall take effect one year after it shall have become law).
[3] Id. at § 4552(1)(a) – (f).
[4] See N.Y. State Dep’t of Health, Material Transactions Notice Electronic Form Questions (Feb. 5, 2025).
[5] See S.9007-B, 2025–2026 Leg., Reg. Sess. (N.Y. 2026); A.10007-B, 2025–2026 Leg., Reg. Sess. (N.Y. 2026) at § 4552(1)(g).
[6] Id. at § 4552(1)(h).
[7] Id. at § 4552(4)(a).
[8] Id. at § 4552(4)(a).
[9] Id.
[10] Id. at § 4552(4)(b).
[11] See N.Y. Pub. Health Law § 4550(4)(b).
[12] See S.9007-B, 2025–2026 Leg., Reg. Sess. (N.Y. 2026); A.10007-B, 2025–2026 Leg., Reg. Sess. (N.Y. 2026) at § 4552(3)(a).
[13] Id. at § 4552(3)(b).
[14] Id.; see also § 4552(5)(a).
[15] Id. at § 4552(3)(b).
[16] Id. at § 4552(8); see also N.Y. Pub. Health Law § 12.
[17] Id. at § 4552(5)(a).
[18] Id. at § 4552(5)(c); see also § 4552(6).
[19] Id. at § 4552(4)(c).
