On February 7, 2025, legislators introduced Washington State House Bill 1881 and its companion bill, Senate Bill 5704 (collectively, the “Bills”), to enhance oversight and regulation of material changes within the state’s health care marketplace. The Bills’ primary stated objectives are to ensure that health care transactions do not adversely affect the accessibility, affordability and quality of health care services for Washington residents.

Background

Washington is one of a growing number of states that already require health care entities to provide notice of a health care transaction. As the map below depicts, health care consolidation is a bipartisan issue that has seen state legislatures from reliably Republican and Democratic states, as well as the Federal Trade Commission (“FTC”) and U.S. Department of Justice (“DOJ”) enacting sweeping new requirements to identify and combat health care consolidation.

Key Changes to Washington’s Current Health Care Material Change Notice Requirements

The Bills aim to amend the current health transaction notice requirements by not only expanding Washington’s definition of a Material Change Transaction (as defined below) but also by looping in the Washington State Health Care Authority. In addition, the Bills create new notification requirements for specific transactions, such as those involving health care entities that serve low-income populations and transactions involving entities that generate more than $10 million in annual revenue. The table below breaks down the most important changes to the current law.

  Current Requirement Proposed Requirement
Material Change Transactions

A Material Change Transaction includes a merger, acquisition or contracting affiliation between two or more entities of the following types:

(a) Hospitals;

(b) Hospital systems; or

(c) Provider organizations.

(“Covered Entities”)

Current Requirements plus transactions including:

(a) Insurance carriers and holding companies; and

(b) All other entities engaged in health care services.

(“Proposed Entities”)
Transactions with Out-of-State Entities Notice required for a transaction with a Covered Entity and an out-of-state entity with at least $10 million in annual revenue from Washington residents. Notice required for a transaction with a Covered Entity or Proposed Entity and an out-of-state entity, regardless of revenue from Washington residents.
State Notice Recipient WA Attorney General (“WA AG”). WA AG and WA Health Care Authority (“HCA”)
Notice Timing 60 days prior to transaction closing. 90 days prior to transaction closing.
Notice Contents

The parties to the transaction must provide:

(1)    The parties to the transaction;

(2)    The parties’ locations where health care services are currently provided;

(3)    A description of the nature and purpose of the proposed transaction; and

(4) A copy of a federal HSR filing, if applicable.

Current Requirements apply to most transactions.

Additional notice requirements apply for:

(1) Transactions where none of the parties are hospitals/hospital systems, but all the parties serve predominantly low-income and medically underserved patients; and

(2) Transactions where at least one of the parties is a hospital or hospital system or at least one of the parties has generated $10 million or more in health care services revenue in any of the preceding three fiscal years.
Review/Approval Approval is not required; however, the WA AG may request additional information within 30 days of receiving notice.

Current Requirements apply to most transactions.

For specific transactions, the HCA must review the information; hold a public hearing; conduct an Access, Affordability, Quality, and Equity Review; and issue a report and recommendation to the WA AG.

The WA AG shall then approve, approve with conditions or modifications, or reject the transaction based on the HCA’s report.

Parties to the transaction may appeal the WA AG’s decision within 30 days of the decision.
Penalties $200/per day Any party who fails to comply with these requirements is liable to the state for a civil penalty up to ten percent (10%) of the value of the transaction, at the discretion of the WA AG.

New Transaction Requirements

In addition to updated requirements in the above table, the Bills also aim to ensure that the pre-transaction health care landscape is not detrimentally changed for patients and consumers.

  • Material Change Transactions are prohibited if they would detrimentally affect the continued existence of accessible, affordable health care in Washington for at least five years post-transaction.
  • Transactions must ensure that affected communities have the same or improved access to quality, affordable care, including emergency, primary, specialty behavioral health, reproductive health, gender-affirming and end-of-life care.
  • The transaction must also result in at least one of the following:
    1. Maintaining or reducing the rate of growth in patient and health plan sponsor costs;
    2. Maintaining or increasing access to services in medically underserved areas;
    3. Rectifying historical and contemporary factors contributing to a lack of health equities or access to services; or
    4. Maintaining or improving health outcomes for residents of Washington state.
  • The Bills do not specify exactly how parties to Material Change Transactions must demonstrate the information in this New Transaction Requirements section. The proposed language appears to simply indicate the factors that the WA AG and HCA will take into account when performing their reviews.

Practical Takeaways

  1. The Bills also offer the possibility of an expedited review, in which the parties may provide documentation to the WA AG and HCA demonstrating the existence of an extraordinary emergency situation. The WA AG must then respond within 10 days to advise the parties and the HCA as to whether any information otherwise required may be waived.
  2. The specific notice requirements and additional review timelines by the WA AG and the HCA are complex and differ depending on the identity of the parties, the size of the transaction and the anticipated effect of the transaction itself. The HCA review alone may include collaboration with several WA health agencies, public hearings, subpoenas for additional information and witnesses, as well as other discovery procedures. In total, the new processes outlined in the Bills may add more than 100 days to the current review and would require active participation by the parties throughout the process.
  3. Should the Bills pass, due to their complexity and rigorous review process, Hall Render recommends that any party considering a Material Change Transaction contact a health care antitrust attorney early on in the transaction to understand the full scope and requirements of the new process.

Next Steps

These bills, along with several others in the U.S., may greatly affect the level of disclosure that parties must submit prior to the consummation of a health care transaction. Hall Render will continue to monitor these developments, and further guidance will be provided should the bills pass. In the meantime, if you have any questions on how the Bills may affect your upcoming transaction or how to prepare and submit a comment in the meantime, 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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