New York Healthcare Transactions and Regulatory Review
New York has some of the strictest rules in place in the country. Corporate practice of medicine laws are often implicated or reviewed when a provider deal occurs. Regulatory review could be necessary at both the state and federal levels. Certain agencies may have to sign off on your deal before it can take operational effect.
The medical transaction attorneys at Daniels, Porco & Lusardi, LLP are highly qualified and ready to fight for your rights. We help you review your provider deal to see what regulatory review may be triggered, and ensure you’re prepared for it.
Why Regulatory Review Matters in New York Healthcare Deals
New York is one of the most heavily regulated healthcare markets in the country. Unlike many states, New York requires regulatory review not only for hospital and facility transactions, but also for certain ownership changes, professional entity restructurings, and management arrangements involving licensed providers.
A deal that skips required review can face:
- Delayed or blocked closing
- Civil penalties
- Loss of licensure
- Contract invalidation
- Mandatory unwinding of the transaction
Understanding the review triggers early in the deal process is essential for accurate timelines, risk allocation, and compliance.
1. Certificate of Need (CON) Review for Facility Transactions
New York’s Certificate of Need program governs ownership and operational changes for Article 28 facilities, including:
- Hospitals
- Ambulatory surgery centers
- Diagnostic and treatment centers
- Nursing homes
- Home care agencies
A CON review is required when a transaction involves:
- Change of ownership (full or partial)
- Change in control of a facility or parent entity
- Establishment of a new facility
- Major service expansions
- Significant capital projects
2. Professional Entity Transactions and the Corporate Practice of Medicine (CPOM)
New York strictly enforces the Corporate Practice of Medicine doctrine. Only licensed professionals may own or control professional service entities (PCs and PLLCs). As a result:
- Non-physicians cannot acquire equity in a medical practice
- Management services organizations (MSOs) must be structured carefully
- Control rights including vetoes, financial controls, and operational authority are scrutinized
While professional entity transactions do not require CON review, they often require Attorney General review, Education Department oversight, or restructuring to ensure compliance with CPOM and fee-splitting prohibitions.
A provider deal needs regulatory review when:
- Ownership of a professional entity changes
- A new physician owner is added
- A non-clinical investor seeks influence over clinical operations
- A management agreement shifts too much control to an MSO
3. Transactions Involving Medicaid or Medicare Providers
If the target entity participates in Medicaid or Medicare, additional review may be triggered by:
- Provider enrollment changes
- Revalidation requirements
- Successor liability rules
- Ownership disclosure obligations
New York Medicaid requires disclosure of all owners, officers, and control persons. A change in ownership may require:
- Updated enrollment forms
- Re-credentialing
- Approval from managed care plans
Failure to complete these steps can interrupt reimbursement and delay integration.
4. Behavioral Health, Substance Use, and Other Licensed Services
Transactions involving mental health, substance use, or developmental disabilities providers require review by:
- The Office of Mental Health (OMH)
- The Office of Addiction Services and Supports (OASAS)
- The Office for People With Developmental Disabilities (OPWDD)
These agencies may require:
- Prior approval of ownership changes
- Programmatic review
- Updated operating certificates
- Site inspections
Deals involving these services often have longer regulatory timelines than traditional medical practice transactions.
5. When Management Agreements Trigger Review
Even without a change in ownership, a provider deal may require regulatory review if a management agreement:
- Transfers too much operational control
- Impacts clinical decision-making
- Alters fee structures in ways that resemble fee-splitting
- Creates a de facto change of ownership
New York regulators evaluate substance over form. If a management agreement effectively shifts control of a licensed provider to an unlicensed party, the arrangement may be deemed unlawful.
Bottom Line for New York Healthcare Deals
A provider transaction in New York needs regulatory review when it involves:
- Ownership or control changes in Article 28 facilities
- Professional entity restructurings that implicate CPOM
- Medicaid or Medicare enrollment changes
- Behavioral health or substance use programs
- Management agreements that shift operational authority
Get Help with New York Healthcare Transactions and Provider Deals
Provider deals could trigger regulatory review, but this isn’t a concern when you have the right help. You can ensure your deal complies with state and federal law to help withstand regulatory scrutiny.
The attorneys at Daniels, Porco & Lusardi, LLP are ready to help. Contact us today for a consultation.