On Feb. 12, 2025, the Texas House of Representatives introduced House Bill 2747, which would require entities to report certain healthcare transactions to the Texas attorney general. Currently, Texas does not require entities to provide notice of a transaction to the state. If H.B. 2747 passes, Texas will join the growing number of states that have implemented regulatory oversight of healthcare transactions.
H.B. 2747 creates a 90-day advance notice requirement to the AG for certain healthcare transactions that would result in material changes. If passed, H.B. 2747 would delegate rulemaking authority to the AG to implement related regulations, which means that any subsequent regulations the AG issues could impact H.B. 2747’s application. If the bill is signed into law, it would take effect on Sept. 1, 2025. The bill has not undergone any amendments or committee reviews since its introduction.
Key Aspects of H.B. 2747
- Covered Transactions. There are six types of “material change transactions” entail a material change to ownership, operations or governance structure of a legal entity that will trigger the notice requirement specified under H.B. 2747:
- A merger that includes at least one healthcare entity
- A sale or acquisition of one or more healthcare entities or of a material amount of the assets or operations of one or more healthcare entities
- An arrangement that results in a person acquiring direct or indirect control over a substantial part of a healthcare entity’s operations or governance
- The formation of a partnership, joint venture, accountable care organization, parent organization or management services organization for the purpose of administering contracts with health carriers, third-party administrators, pharmacy benefit managers or healthcare providers
- Sale or transfer of control of a healthcare entity’s board of directors or other governing body
- A real estate sale or lease agreement involving a material amount of healthcare entity assets
- Covered Entities. The types of “healthcare entities” covered by H.B. 2747 are broad and includes:
- Healthcare providers (individuals holding Texas licenses or qualifications to provide healthcare services in the state)
- Healthcare facilities (facilities licensed to provide healthcare services including hospitals, health systems, nursing facilities, ambulatory surgical centers, emergency care facilities, imaging centers, outpatient clinics and therapeutic centers)
- Provider organizations (groups of persons in the business of healthcare services including management services organizations, physician-hospital organizations, independent practice associations, provider networks and accountable care organizations)Health carriers that offer health benefit plans
- Pharmacy benefit managers
- Fees and Penalties. Failure to provide notice in violation of H.B. 2747 could result in a civil penalty up to $10,000 for each violation. H.B. 2747 allows the AG to recover the civil penalty, attorneys fees and enjoin an entity from violating H.B. 2747.
- Market Studies. H.B. 2747 also directs the AG to conduct a market study on the healthcare market in Texas to understand the ownership of healthcare entities, concentrations, price trends and competition
While H.B. 2747 would create a broad notification requirement for healthcare transactions impacting Texas, unlike states with similar requirements such as California and Massachusetts, H.B. 2747’s proposed language explicitly states that all documents and information provided to the AG would be confidential and only released to the public with the consent of the submitting entity or to an expert or consultant bound by the same confidentiality requirements as the AG and under contract with the AG to create a study related to the healthcare market, market concentration, trends, competition or similar impacts.
McGuireWoods has provided insights to other state healthcare transaction reporting requirements and will continue to monitor states introducing and enacting similar requirements. McGuireWoods’ healthcare transactions team — which brings together regulatory, corporate and antitrust expertise — has significant experience navigating state healthcare filings. Our lawyers closely track guidance and developments in this area to provide clients with informed strategic advice, from considering the regulatory burden associated with acquiring individual targets to achieving approval by state regulators. For questions, reach out to the authors or your McGuireWoods contact.