Illinois Makes Health Care Transaction Notice Law Permanent, Expands Private Equity Coverage

On August 7, Governor Pritzker signed into law HB 5000 (Public Act 104-0782), which amended the health care transaction notice laws in Illinois. The amendment eliminates a January 2027 sunset date for provisions of both the Illinois Health Facilities Planning Act and the Illinois Antitrust Act. It also expands the types of health care transactions for which state Attorney General notice is required. The amended provisions are scheduled to take effect on January 1, 2027.

The new law specifically calls out transactions involving private equity companies and defines those in the text of the statute. Illinois joins a growing number of states that have amended their health care transaction review laws to address private equity ownership more directly; including laws in Washington, California, Maine and Connecticut, a moratorium on transactions involving acute care hospitals in Delaware and a law in Vermont that prohibits private equity groups or hedge funds from interfering with clinical decision making.

What does the Illinois Law do?

HB 5000 has three key objectives. First, it expands the definition of a “covered transaction” to capture more types of health care deals. Second, it explicitly brings transactions involving private equity sponsors, including those that indirectly own health care entities, within the law’s notice requirements. Third, it eliminates the January 1, 2027 sunset date for the transaction notice requirements, making that part of the law permanent. 

Changes to Notification Law

The new law’s primary change is to amend the Illinois Antitrust Act, 740 ILCS 10/7.2a, to expand the types of transactions that are covered by the law’s notice requirements. Previously, Illinois law required notice only for a “merger, acquisition, or contracting affiliation between 2 or more health care facilities, or provider organizations.” HB 5000 expands coverage to any transaction “involving” these entities, a subtle but significant change in language that will sweep in many more transactions.

Original Notification Statute

Section 7.2a was originally added in 2024 as part of Public Act 103-0526, which required that any transaction between two or more health care facilities or provider organizations  be noticed to the Attorney General in writing no later than 30 days prior to the closing date of the transaction. 

The written notice required by the 2024 law could consist of either the Hart-Scott-Rodino (HSR) filings that the organizations needed to send to the Federal Trade Commission or, for transactions below the HSR threshold, through an automatic notice sent by the state Health Facilities and Services Review Board as part of the Illinois Health Facilities Planning Act. 

For transactions not otherwise captured by an HSR filing or the Health Facilities Planning Act process, the 2024 law required written notice to include: (A) the names of all health care facilities and provider organizations involved in the covered transaction and their current business addresses; (B) identification of all locations where health care services are currently provided by each entity; (C) a brief description of the nature and purpose of the proposed transaction; and (D) the anticipated effective date of the proposed transaction.

As noted earlier, the 2024 law only applied to transactions between two or more health care facilities or provider organizations. It provided a list of defined “health care facilities,” including ambulatory surgical treatment centers, hospitals, kidney disease treatment centers, and institutions providing health care categories of service such as cardiac catheterization and open-heart surgery, specifically defining provider organizations as entities representing 20 or more health care providers in contracting with health carriers. The law specifically excluded facilities operated as part of the practice of a physician or other licensed health care professional.

What changed

The written notification requirements and the manner in which parties can satisfy them were left unchanged by the new law, except for the addition of language to reflect the expanded universe of transactions covered by written notice requirements. Additionally, the categories of facility and provider organization are still included in the law as is the exclusion for facilities operated as part of the physician practice. 

But, as mentioned above, the new law actually expanded the universe of covered transactions to include transactions in which one of the parties is not specifically a health care facility or provider organization. The amendment adds a provision to the covered transaction definition that includes transactions where one or more of the parties is any other entity that will “own or control, directly or indirectly,” one or more of the health care facilities or provider organizations that will be under common ownership or contracting affiliation.

The law specifically identifies transactions involving private equity companies as subject to the reporting requirements, including indirect and partial ownership transactions. It defines a “private equity company” as “any company or partnership that collects capital investments from individuals or entities and purchases, as a parent company, at any level of corporate ownership, or through another entity or entities so that the company completely or partially owns or controls a direct or indirect ownership share” of either an Illinois health care entity or an out-of-state health care entity that generates $10 million or more in annual revenue from patients residing in Illinois.

The law’s requirement to provide notice no later than 30 days prior to the closing date continues to be backed by a penalty clause where the Attorney General can seek $500 per day from the parties for failure to provide timely notice. It also continues to include the provisions that allow the Attorney General to request more information about the transaction during the 30 days after the notice and before the closing date and require that the closing date must be pushed back to 30 days after the parties have complied with these further information requests.

The Attorney General may seek a temporary restraining order or injunction in the Circuit Court of Sangamon or Cook County against any party that fails to comply with the notice requirements. Before bringing such action, however, the Attorney General must permit the non-compliant party to comply within 10 days of being notified of its alleged noncompliance.  This cure right terminates on or after the transaction’s proposed or actual closing date, whichever is sooner.

Change to Sunset Dates

The change to the auto-repeal provisions alters the scope of the 2024 law in a couple of different ways. 

For the Illinois Health Facilities Planning Act, 20 ILCS 3960/8.5, it only removes the January 1, 2027 sunset date from the requirement that the Health Facilities and Services Review Board send a legal notice to the state Attorney General upon a finding that an application for a change of ownership is complete, making that requirement a permanent part of the law as long as the law is active. However, the entire Section 8.5 is still scheduled to repeal on December 31, 2029 and HB 5000 does nothing to change that. Thus any transactions after that date that were relying on the Health Facilities and Services Review Board [to forward the  change of ownership filing to the Attorney General would likely have to provide a written notice to the Attorney General directly from the parties, barring further legislative action to extend that section.

The most important change comes as part of the Illinois Antitrust Act, 740 ILCS 10/7.2a and 740 ILCS 10/13. As mentioned above, Section 7.2a was added by the 2024 law to require transactions between two or more health care facilities or provider organizations to be reported to the state Attorney General no later than 30 days prior to the closing date. That section and a provision that allowed the state to deposit any penalties for noncompliance into a special Antitrust Enforcement Fund created for enforcing the Act were all scheduled to expire on January 1, 2027. However, HB 5000 removes the auto-repeal provisions and does not replace them with any new dates. Thus the notification provisions as amended are permanent features of the law.

The new law also makes a technical change to the State Finance Act’s special funds section, 30 ILCS 105/5.1007, making the Antitrust Enforcement Fund a permanent fixture of the law as opposed to allowing it to sunset on January 1, 2027.

What have other states been doing?

A number of states this year have considered restrictions on health care transactions involving private equity companies and hedge funds, with a new law passing nearly every month. 

Two new California laws took effect in January that directly impacted private equity health care transactions in the state. We covered AB 1415, which expanded the scope of transactions requiring notice to the state, in a previous blog post. We also covered SB 351, which restricted involvement of private equity companies and hedge funds in clinical decision making, in yet another previous blog post.

Washington Governor Bob Ferguson signed HB 2548 into law in March. That law is similar to the Illinois law in that it includes transactions with for-profit entities into the notice requirements of a prior existing health care transaction notice law. The law also requires more detailed reporting in the written notice directed at revealing the names of persons or entities with a majority or controlling interest in the proposed parties.

In April, Maine passed HP 1480, a law that required material change transactions involving health care entities and private equity companies, hedge funds or management services organizations to be noticed to the state Department of Health and Human Services for review and approval.

Connecticut passed  SB 196 in May. That law required hospitals to attest to the state that no private equity company owns a controlling interest in the hospital or interferes with the professional judgment or clinical decision-making of certain health care providers.

In Vermont, the governor signed H. 583 into law in June. That law required substantial reporting of private equity or hedge fund ownership to the state regulatory Green Mountain Care Board as well as prohibiting interference by private equity or hedge funds in the clinical decision making at a health care facility. The law also established a private right of action for health care providers “aggrieved” by violations of the law.

In July, Delaware passed S.B. 313, placing a two-year moratorium on any change of control transaction involving a nonprofit acute care hospital and a for-profit corporation. The law specifically calls out hospital private equity ownership and the legislative findings in the law said that “a moratorium on such transactions by private equity firms is necessary to allow the State time to develop permanent statutory safeguards appropriate to Delaware’s health care market and the characteristics of its hospital systems.”

What does this mean?

State focus on private equity ownership in health care is still going strong in 2026. While some laws, like the Delaware moratorium, are temporary and some, like the Connecticut law, simply require reporting of ownership interest and forbid interference with clinical decision-making, others are more permanent and wide-ranging.

The expansion of the Illinois notice requirements and its now permanent status with a direct focus on private equity show that states are not slowing down. Private equity firms and health care investment platforms should carefully evaluate their current and pending transactions to ensure compliance with these new requirements. Any health care facilities or physician organizations considering change of control transactions should keep an eye on the state laws and their timing requirements.

Not every state is the same on the timing requirements. For example, In Illinois the notice requirement is only 30 days prior to closing, which could be expanded slightly by additional requests for documents. By contrast, Maine’s notice requirement is 180 days prior to closing.

Entities seeking changes in control in these jurisdictions or any of the 14 other states enforcing health care transaction reporting or approval requirements should consult those laws or counsel to make sure they are not running afoul of those requirements. Given the pace at which these laws are being passed, entities considering transactions should keep abreast of developments in this area in real time.

Reed Smith will continue to follow developments related to state health care transaction laws. If you have any questions about these laws or would like to discuss a proposed transaction, please do not hesitate to reach out to the authors of this post or to the health care lawyers at Reed Smith.