Changes to federal rules governing mergers and acquisitions could have sweeping effects on hospice and other health care transactions.

The Federal Trade Commission (FTC) recently finalized a rule that will implement changes to required pre-merger notification forms. Pursuant to the Hart-Scott-Rodino Act, parties to certain transactions must submit these documents to the FTC and other regulatory agencies to help identify and address potential antitrust concerns.

The law requires that transactions exceeding $120 million must submit the form, which agencies will use to conduct a 30-day premerger assessment, according to Luke Smith, member at the law firm Bass, Berry and Sims. The final rule will likely complicate the closing of some hospice acquisitions.

“[The form] is changing significantly in ways that are increasing the burden on the parties. The amount of information that the parties have to provide will be much, much more significant, just lots more questions to answer and many more documents to provide to the agencies,” Smith told Hospice News. “The practical impact of that is that it will take significantly longer to prepare the forms and cost significantly more money.”

When submitting the form, parties to a transaction must also pay filing fees, the amount of which is determined by the size of the deal. The fees could reach millions of dollars for large acquisitions. Both buyers and sellers must submit the premerger notification. However, under the new regulations the process may be more onerous for the buyer, Smith indicated.

The final rule reflects the federal government’s growing concern about antitrust violations, with a partial focus on health care.

President Joe Biden in 2021 announced a set of new rules and guidelines for mergers and acquisitions, with pledges to implement by mid-2024.

Six months after taking office, Biden signed an executive order that created a White House Competition Council, designed to address antitrust concerns in a range of industries, including health care. These actions followed a steep rise in corporate consolidation and its potential impact on the prices of goods and services.

“Families are paying higher prices for necessities — things like prescription drugs, hearing aids and internet service,” the White House indicated in a statement. “And when there are only a few employers in town, workers have less opportunity to bargain for a higher wage and to demand dignity and respect in the workplace. In total, higher prices and lower wages caused by lack of competition are now estimated to cost the median American household $5,000 per year.”

In the years since the administration took this position, scrutiny of M&A transactions has been on the rise, as have associated lawsuits and investigations by government agencies, including the U.S. Justice Department and the FTC. In May, the Justice Department unveiled a new Antitrust Division Task Force on Health Care Monopolies and Collusion to perform antitrust investigations on health care deals.

“The agencies have been very aggressive, especially the FTC, has been very aggressive in all sorts of aspects in the antitrust world, specifically with health care. There’s a lot of private equity roll up activity happening in health care, and they have filed lawsuits to basically unroll some that have happened,” Smith said. “The FTC is really heavily focused on health care.”