The Rhode Island Office of the Attorney General (“OAG”) recently implemented a new regulation that imposes a pre-merger notification rule for certain transactions involving medical-practice groups (i.e. legal entities formed primarily for the purpose of being a physician group practice). This rule became effective as of January 28, 2026 and is part of a larger legislative movement by states to monitor, approve, or prohibit the role of private equity in healthcare, as discussed below. Notably, this rule is likely to reach most transactions that impact medical-practice groups, even outside of traditional M&A activities.
In its announcement of the final rule, the OAG noted that “this regulation enables the Office to review and investigate potentially anticompetitive transactions to prevent excessive market consolidation, slow the growth of health care prices, and protect the quality of care.” Attorney General Nerohna commented that “[t]his regulation gives my Office a bird’s eye view to ensure that future medical group mergers do not harm Rhode Islanders’ access to health care services.” As a new process, there is some uncertainty about implementation, including how aggressive the OAG will be when evaluating proposed transactions. Parties planning to pursue transactions within the scope of this new pre-merger notification rule should devote time to familiarizing themselves with the new filing requirements now.
Rulemaking History
The OAG issued a Public Notice of Proposed Rulemaking on May 28, 2025, accepted public comments until July 23, 2025, and held a public hearing on the proposed regulation on July 8, 2025. The revised regulation was submitted for final approval by the Rhode Island Secretary of State in early January 2026 and became effective January 28, 2026.
Pre-Merger Notification Rule Requirements
Pursuant to the new pre-merger notification rule, parties to any transaction that results in a material change to the business or corporate structure of a medical-practice group must submit written notice to the Attorney General no less than 60 days prior to the transactions’ effective date.
Generally, the regulations cover transactions, such as mergers, affiliations, acquisitions, and employment of all or substantially all physicians, involving a medical-practice group with (i) another medical-practice group that results in a medical-practice group comprised of eight or more physicians, physician assistants, and/or nurse practitioners, or (ii) a hospital, hospital system, captive professional entity, medical foundation or other entity organized or controlled by such hospital or hospital system. The regulations also require notice of joint ventures, accountable care organizations, management services organizations, and other organizations formed to administer contracts with health insurance carriers or third-party administrators or to engage in commercial contracting on behalf of one or more medical-practice groups. Finally, notice is required for transactions involving a significant equity investor (including private equity) that result in a change of ownership or control of a medical-practice group.
The OAG’s Notice of Material Change Form is available here. The parties must provide: (a) information about the transacting parties; (b) a description of the proposed transaction, including its nature and purpose; (c) the existing locations and health care services provided by each transacting party; (d) any new locations and health care services or changes to existing locations and services contemplated after consummation of the proposed transaction; (e) the proposed effective date; and (f) the anticipated impact of the transaction, including any impact on reimbursement rates, care referral patterns, access and quality.
Completed forms and any accompanying supplemental information must be submitted to [email protected]. If any information changes following submission, the parties must notify the OAG within ten business days. The OAG is not required to respond to a submission but may contact the parties for clarifications or to request additional information.
The information submitted by the parties to the OAG may become public or be disclosed by the OAG only to the extent necessary for law enforcement purposes in the public interest.
Penalties
The new regulations impose a penalty for failure to provide the requisite notice of up to $200 per day starting the 59th day prior to the effective date of the transaction and up to $100,000 after the effective date of the transaction. The OAG may also pursue injunctive relief to pause the consummation of a proposed transaction until the transacting parties have been in compliance with the pre-merger notification rule for at least 60 days.
Impact on Dealmaking
The new pre-merger notification rule will add expense to the M&A process and could extend the anticipated timeline for consummating transactions involving medical-practice groups. This rule is likely to reach most transactions that impact medical-practice groups, even outside of traditional M&A activities, such as the formation of a management services organization to administer health contracts. As a new process, there is also some uncertainty about implementation, including the types of transactions the OAG will focus on and how aggressive the OAG will be when evaluating proposed transactions.
Parties planning to pursue transactions within the scope of the new pre-merger notification rule should familiarize themselves with the new filing requirements and implement internal processes and procedures to abide by this new process. Transacting parties should also carefully evaluate the antitrust risks posed by their proposed transaction in order to prepare for a potential OAG investigation. If a proposed transaction presents heightened antitrust concern, the parties may wish to proactively approach the OAG early in the M&A process before expending a lot of time and effort on conducting diligence and negotiating a purchase agreement. Parties should also include provisions in their purchase agreements addressing this process.
Landscape
Rhode Island’s new pre-merger notification rule reflects growing concerns in Rhode Island and across the country about the adverse effects of an increasingly consolidating health care industry. This rule also highlights a broader regulatory focus on private equity firms and other financial investors’ entry into and increased participation in the health care industry. Over the past two years, more than twenty states (including Massachusetts, Maine and Vermont) have considered legislation related to the role of private equity in their healthcare systems, in addition to their traditional antitrust oversight authority. The majority of these legislative efforts have included measures to require transparency and reporting of ownership and control relationships involving healthcare organizations. This legislation, like Rhode Island’s pre-merger notification rules, is focused on enhanced visibility for regulatory bodies who are then able to evaluate these transactions before consummation. Some states have gone farther and imposed an affirmative regulatory review process (beyond their traditional antitrust authority) where regulators can condition or block private equity healthcare transactions. Some states have considered or enacted prohibitions of certain practices, like Maine’s one-year moratorium on hospital acquisitions involving private equity or Vermont’s proposed prohibition on transactions involving private equity, debt-financed acquisitions of health care entities, and certain hospital affiliations. Vermont’s proposed legislation would also (similar to legislative efforts in other states) strengthen prohibitions on the corporate practice of medicine by disallowing common workarounds.
The breadth and variety of state regulatory actions in the field of healthcare transactions makes good counsel crucial.
