On February 12, 2025, the Texas House of Representatives (“House”) introduced House Bill 2747 (“H.B. 2747”), which would require entities to report certain health care transactions to the Texas Attorney General (“AG”). If passed, H.B. 2747 would go into effect on September 1, 2025, adding Texas to the growing list of states exercising increased oversight over health care transactions.

H.B. 2747 – Background and Notice Requirements

H.B. 2747 would implement a 90-day advance notice requirement for any health care transaction that results in a material change. H.B. 2747 defines a “material change transaction” as “a transaction that entails a material change to the ownership, operations or governance of a health care entity.” Specifically, the following types of material change transactions require written notice:

  1. A merger that includes one or more health care entities;
  2. A sale or other acquisition of one or more health care entities or a material amount of the assets or operations of one or more health care entities;
  3. A contract or other arrangement that results in a person acquiring direct or indirect control over all or a substantial part of the health care entity’s operations or governance;
  4. 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 health care providers;
  5. The sale, purchase, lease, affiliation or transfer of control of a health care entity’s board of directors or other governing body; or
  6. A real estate sale or lease agreement involving a material amount of health care entity assets.

H.B. 2747’s reporting requirement applies to an expansive selection of “health care entities” engaging in material change transactions, including:

  • Health care providers (defined as “an individual holding Texas licenses or qualifications to provide health care services in this state”);
  • Health care facilities (defined to include all facilities licensed to provide health care services, including hospitals, health systems, nursing facilities, ambulatory surgical centers, emergency care facilities, imaging centers, outpatient clinics and therapeutic centers);
  • Provider organizations (defined to include groups of persons in the business of health care services including management services organizations, physician-hospital organizations, independent practice associations, provider networks and accountable care organizations); and
  • Pharmacy benefit managers.

H.B. 2747 would also extend to the Texas AG the power to conduct market studies on the conditions of a health care market within the state and the impacts of completed material change transactions on a market. This would include an assessment of the degree of health care entity ownership or other concentration, the strength of competitive forces on prices and quality of health care services and trends in the price, quality and availability of health care services.

Growing Trend

A growing number of states are implementing health care transaction regulations, expanding oversight of mergers, acquisitions and other deals, with varying requirements for notice, review and approval. While each state cites varying policy priorities, a common emphasis on addressing competition, market concentration and access to quality care has emerged. The map below indicates which states have either pending legislation or requirements for notice, review and/or approval of health care transactions.

Practical Takeaways

  • H.B. 2747 does not specifically prescribe the contents of the notice to be provided, instead allowing the Texas AG to determine the content of the notice by rule.
  • H.B. 2747 contains confidentiality requirements that protect all documents and other information provided to the Texas AG in connection with the notification requirement.
  • If H.B. 2747 passes, health care deals and investments may be delayed while costs and government scrutiny would likely increase. As a result, health care organizations (particularly those backed by private equity) should keep an eye on further developments of this proposed legislation and engage legal counsel for review of pending transactions.

Failure to provide notice pursuant to H.B. 2747 could result in a civil penalty of $10,000 per violation.

Hall Render’s health transactions team continues to monitor health care transaction reporting requirements across the country. If your health care organization is considering additional M&A activity, please contact:

Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.

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