Hart-Scott-Rodino (HSR) premerger notifications are part of the U.S. antitrust regulatory framework. According to an FTC document on HSR, “The Act requires that parties to certain mergers or acquisitions notify the Federal Trade Commission (“FTC” or the “Commission”) and the Department of Justice (“DOJ”) (together, the “enforcement agencies”) and observe a waiting period before closing the proposed transaction.”
The primary purpose is to provide these agencies with an opportunity to assess whether a proposed merger could lead to anticompetitive effects, such as reduced competition or increased prices for consumers. For healthcare organizations specifically, these regulations can add complexity and cost when pursuing strategic growth through mergers or acquisitions.
The main points of the HSR premerger notification rules
- The HSR Act requires parties to large mergers and acquisitions submit premerger notifications to the FTC and DOJ for antitrust review.
- Transactions must exceed a certain value threshold (currently $119.5 million, adjusted annually) to be reportable under HSR.
- Parties must complete an HSR Form, providing detailed information about their businesses and transactions.
- Deals cannot close until a statutory waiting period has passed or early termination is granted by regulatory authorities.
- New rules significantly increase the scope and detail required in filings, affecting all reportable transactions starting February 10, 2025.
- The FTC administers the program with support from the DOJ Antitrust Division.
Related: Government initiative to expose healthcare market manipulation
How they influence healthcare mergers
As the FTC has recently updated these requirements, healthcare companies involved in mergers and acquisitions must not provide more comprehensive data to regulators. The increased oversight can complicate deal structures and timelines. These regulations do aim to prevent anti-competitive practices that could limit access to affordable healthcare services or reduce innovation in medical treatments and introduce complexities that need careful management by affected organizations.
The state-level “baby HSR” laws
State-level "Baby HSR" laws require parties involved in certain transactions to notify state authorities before closing deals. The notification process typically includes a waiting period, which can vary significantly across states, ranging from less than 30 days to several months. These "Baby HSRs" focus primarily on healthcare mergers as states seek to scrutinize consolidation within their local healthcare systems more closely. For example, California's law covers transactions involving significant changes in ownership or operations of healthcare entities, while Colorado focuses on hospital asset transfers exceeding certain thresholds.
Related: HIPAA Compliant Email: The Definitive Guide
FAQs
How does HIPAA apply during mergers or acquisitions involving healthcare entities?
During mergers or acquisitions, HIPAA requires that covered entities secure protected health information (PHI). The responsibility includes maintaining confidentiality agreements during due diligence phases to prevent unauthorized disclosure of PHI.
Do HSR premerger notifications involve handling PHI under HIPAA?
Generally, HSR filings do not directly involve PHI unless specific business operations require access to PHI as part of the merger review process.
Kirsten Peremore
