An Act providing for approval from the Department of Health and the Office of Attorney General before certain transactions involving health care entities within this Commonwealth.

PRINTER'S NO. 817
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No. 322
Session of
2025
INTRODUCED BY KEARNEY, KANE, CAPPELLETTI, A. WILLIAMS, HAYWOOD,
SAVAL, COSTA, SCHWANK AND FLYNN, MAY 22, 2025
REFERRED TO INSTITUTIONAL SUSTAINABILITY AND INNOVATION,
MAY 22, 2025
AN ACT
Providing for approval from the Department of Health and the
Office of Attorney General before certain transactions
involving health care entities within this Commonwealth.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Covered Health Care Transactions
Section 301. Transactions against public interest.
Section 302. Filing of transactions.
Section 303. Public input.
Section 304. Determination and restraining prohibited
transactions.
Section 305. Compliance and power of court.
Section 306. Powers and duties of Attorney General.
Section 307. Powers and duties of department.
Section 308. Confidential treatment.
Chapter 10. Miscellaneous Provisions
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Section 1001. Construction.
Section 1002. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Health System
Protection Act.
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Affected community." A county within this Commonwealth
where an existing health care facility is physically located or
a county whose residents are regularly served by the existing
health care facility.
"Affiliate." A person that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is
under common control with, the person specified.
"Against the public interest." A covered transaction that,
as determined by the Attorney General, results in any of the
following:
(1) A significant reduction in competition or a
significant increase in costs for health care payers,
purchasers or consumers.
(2) An unfair method of competition in or affecting
health care commerce or an unfair or deceptive act or
practice in or affecting health care commerce.
(3) A significant reduction in the quality of care.
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(4) A significant reduction in access to or availability
of health care services for payers, purchasers or consumers.
(5) A significant reduction in access to care in a
rural, low-income or disadvantaged community.
(6) A health care leaseback agreement.
"Attorney General." The Office of Attorney General of the
Commonwealth.
"Capital distribution." A payment made, liability incurred
or other consideration given by a health care entity to a person
for the purchase, acquisition, redemption, repurchase, payment
or retirement of capital stock or other equity interest of the
health care entity or as a dividend, return of capital or other
distribution in respect of the health care entity's capital
stock or other equity interest.
"Control," "controlled by" or "under common control with."
As follows:
(1) The possession, direct or indirect, of the power to
direct or cause the direction of the management and policies
of a person, whether through the ownership of voting
securities, by contract other than a commercial contract for
goods or nonmanagement services or otherwise, unless the
power is the result of an official position with or corporate
office held by the person. Control shall be presumed to exist
if a person, directly or indirectly:
(i) owns more than 10% of a person; or
(ii) controls, holds with the power to vote or holds
proxies representing 10% or more of the votes that all
shareholders or members would be entitled to cast in the
election of directors or managers.
(2) The presumption under paragraph (1) may be rebutted
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by a showing that control does not exist in fact. The
Attorney General may determine, after furnishing all persons
in interest notice and opportunity to be heard and making
specific findings of fact to support the determination, that
control exists in fact, notwithstanding the absence of a
presumption to that effect or that another person has
control.
"Covered entity." Includes:
(1) A for-profit entity or an affiliate of a for-profit
entity that owns, operates or controls or seeks to own,
operate or control a health care entity.
(2) An investor or group of investors who primarily
engage in the raising or returning of capital and who invest,
develop or dispose of specified assets, a private equity
company, a private equity fund or a real estate investment
trust or affiliate.
"Covered transaction." A transaction or a series of
transactions involving at least one health care entity and one
covered entity, and includes any of the following:
(1) The sale, transfer, lease or other encumbrance of a
material amount of a health care entity's assets, including
real property, employment groups, emergency departments or
other units.
(2) A change in control of a health care entity.
(3) A capital distribution or similar reduction of a
health care entity's equity capital by a material amount or
the incursion of an obligation that commits the health care
entity to making a capital distribution or similar reduction
of equity by a material amount.
"Department." The Department of Health of the Commonwealth.
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"Health care entity." The term includes:
(1) A person that directs, or through an affiliate
directs, control of one or more health care facilities.
(2) A practitioner organization, representing eight or
more health care practitioners, valued at or above a material
amount.
"Health care facility." The term shall have the same meaning
as in section 802.1 of the act of July 1, 1979 (P.L.130, No.48),
known as the Health Care Facilities Act.
"Health care leaseback agreement." A transaction whereby a
person sells, transfers, leases or otherwise encumbers a
material amount of the assets or real property of a health care
entity and enters into an agreement with another person to lease
back the same assets or real property.
"Health care practitioner." The term shall have the same
meaning as in section 103 of the Health Care Facilities Act.
"Material amount." An amount equal to $5,000,000 or more.
"Practitioner organization." A person, other than a health
care facility, which is in the business of health care delivery
or management and that represents health care practitioners in
contracting with carriers or third-party administrators for the
payment of health care services.
"Private equity company." A nonpublicly traded entity that
collects capital investments from individuals or entities.
"Private equity fund." An entity that directly, or through
an affiliate, acts as a control person and is any of the
following:
(1) A person considered an investment company under 15
U.S.C. § 80a-3 (relating to definition of investment
company), except for the application of 15 U.S.C. § 80a-3(c)
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(1) and (7).
(2) A venture capital fund as defined in 17 CFR
275.203(l)-1 (relating to venture capital fund defined).
(3) A sovereign wealth fund.
"Professional licensing board." A professional licensing
board within the Bureau of Professional and Occupational Affairs
of the Department of State.
"Real estate investment trust." The term shall have the same
meaning as in 26 U.S.C. § 856 (relating to definition of real
estate investment trust).
CHAPTER 3
COVERED HEALTH CARE TRANSACTIONS
Section 301. Transactions against public interest.
(a) General rule.--Except as provided under subsection (b),
a person may not enter into a covered transaction that is
against the public interest.
(b) Exception.--An action prohibited under subsection (a)
may be permitted when, as determined by the Attorney General,
there is no feasible alternative to prevent a health care
entity's closure or a greater loss of health care services.
Section 302. Filing of transactions.
(a) Duties of health care entity.--Prior to entering into a
covered transaction, a health care entity shall complete one of
the following:
(1) file a notification in accordance with subsection
(b) and observe the waiting period under subsection (c); or
(2) obtain a written determination from the Attorney
General that the covered transaction is not against the
public interest.
(b) Notice.--Notification of a covered transaction shall be
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submitted to the Attorney General and the department on a form
and in a manner developed by the Attorney General. The
notification shall include all of the following, as applicable:
(1) All organic documents, including articles of
incorporation, bylaws, operating agreements and other
documents related to governance and ownership of each party.
(2) All complete transaction documents with attachments,
including collateral or ancillary agreements involving
officers, directors or employees.
(3) All documents signed by the principals, or the
principal's agents, that are necessary to determine the
proposed transaction's effect, if any, on affiliates, whether
nonprofit or for profit.
(4) Any of the following that comprise part or all of
the transaction:
(i) Asset contribution agreements.
(ii) Operating agreements.
(iii) Management contracts.
(5) All information necessary to evaluate the effects of
the transaction on each component of an integrated delivery
system if that transaction involves a hospital, including any
changes in contracts between the integrated delivery system
entities and related physician groups.
(6) All financial documents of the transaction parties
and related entities, if applicable, including audited
financial statements, ownership records, business projection
data, current capital asset valuation data and any records
upon which future earnings, existing asset values and fair
market value analysis can be based.
(7) All fairness opinions and independent valuation
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reports of the assets and liabilities of the parties,
prepared on the parties' behalf.
(8) A list of all donor restricted assets, together with
origination documents and current fund balances.
(9) All relevant contracts that may affect value,
including business contracts and employee contracts, such as
buy-out provisions, profit-sharing agreements and severance
packages.
(10) All information and representations disclosing
related party transactions that are necessary to assess
whether the transaction is at arm's length or involves self-
dealing.
(11) All documents relating to noncash elements of the
transaction, including pertinent valuations of security for
loans and stock restrictions.
(12) All tax-related information, including the
existence of tax-free debt subject to redemption and
disqualified person transactions yielding tax liability.
(13) A list of ongoing litigation, including full court
captions, involving the transaction parties or the
transaction parties' related entities, that may affect the
interests of the parties.
(14) All information in the possession of the
transacting parties relative to the perspective of the health
care entity's patient base and communities served, or their
representatives.
(15) All information, including internal and external
reports and studies, bearing on the effect of the proposed
transaction on the availability or accessibility of health
care in the affected community.
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(16) A complete list of all insurance plans under
contract and the policies' expiration dates.
(17) Organizational charts of the parties to the
transaction, as they exist both preconsummation and
postconsummation of the transaction, detailing the
relationship between the principal parties, including any
subsidiary.
(18) All additional documents that the Attorney General
deems necessary for review purposes.
(c) Waiting period.--Prior to entering into a covered
transaction, a health care entity shall undergo a 90-day waiting
period, which shall begin on the date the Attorney General
receives the notification required under subsection (b). Within
two business days, the Attorney General shall confirm receipt of
the notification with the health care entity that submitted the
notification. Upon the expiration of the waiting period provided
for under this subsection, and any extension of a waiting period
under subsection (d), the covered transaction may proceed unless
the Attorney General determines the covered transaction is
against the public interest.
(d) Additional information and waiting period extensions.--
(1) The Attorney General may, no later than 30 days
prior to the expiration of the waiting period under
subsection (c), require the submission of additional
information or documentary material from a person who is a
party to the proposed covered transaction for which a
notification was filed under subsection (b) or from any
officer, director, partner, agent or employee of the person.
(2) The Attorney General may, in its discretion, extend
the waiting period under subsection (c) for an additional 30
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days for a covered transaction after the date on which the
Attorney General receives either of the following from a
person to whom a request is made under paragraph (1):
(i) all of the additional information and
documentary material requested; or
(ii) if the request is not fully complied with, the
information and documentary material submitted and a
statement of the reasons for the noncompliance.
(3) Additional extensions of the waiting period beyond
what is required under subsection (b) must be granted by a
court in accordance with section 305.
Section 303. Public input.
(a) Public hearing.--Prior to the expiration of the
respective waiting period under section 302(c), along with any
extension granted under section 302(d), the Attorney General may
conduct one or more public hearings on the proposed covered
transaction.
(b) Accessibility.--
(1) A public hearing required under subsection (a) shall
be live-streamed on the Attorney General's publicly
accessible Internet website.
(2) A video recording of the public hearing shall be
posted on the Attorney General's publicly accessible Internet
website.
(c) Specific entities.--If a covered transaction involves
the acquisition of a health care facility, the Attorney General
may hold a public hearing in any county in which the acquired
entity is located to hear comments from interested parties.
Interested parties shall include employees of the health care
entity, legal aid organizations, public officials and health
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advocacy organizations within a county in which the health care
facility is located. The Attorney General may request testimony
at a hearing from State agencies subject to section 306(d).
(d) Notice.--At least 14 days before the date of the public
hearing, the Attorney General shall provide written notice of
the date, time and place of the public hearing:
(1) On the Attorney General's publicly accessible
Internet website.
(2) Through social and broadcast media.
(3) Through publication in one or more newspapers of
general circulation in the affected community.
(4) To the governing body of each county in which the
health care entity is located.
(e) Substantive changes to proposal.--If a substantive
change in the covered transaction is submitted to the Attorney
General after the initial public hearing, the Attorney General
may conduct an additional public hearing to hear comments from
interested parties with respect to the change.
Section 304. Determination and restraining prohibited
transactions.
(a) Determination.--No later than the final date of
expiration of the respective waiting period under section
302(c), along with any extension granted under section 302(d),
the Attorney General shall determine whether the covered
transaction is likely to have an impact that is against the
public interest.
(b) Department review.--Prior to making a determination
whether a covered transaction is against the public interest,
the Attorney General shall consult and request feedback from the
department regarding the covered transaction's potential impact
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on the existing patient base and affected community.
(c) Action.--If the Attorney General, in consultation with
the department, determines that the proposed covered transaction
is against the public interest under subsection (a), the
Attorney General, on behalf of the Commonwealth, may:
(1) commence an action in a court of competent
jurisdiction to enjoin the covered transaction; or
(2) enter into a voluntary agreement with the covered
entity and the health care entity, which shall be filed with
Commonwealth Court, that imposes conditions or otherwise
mitigates the aspects that make the covered transaction
against the public interest.
(d) Monitoring.--
(1) A voluntary agreement entered into under subsection
(c) shall include an initial monitoring period of not more
than five years. The monitoring period may be extended for
additional periods of not more than five years at the
discretion of the Attorney General.
(2) The Attorney General shall consult with the
department prior to setting the length of the initial
monitoring period and any extension.
(3) During the monitoring period, the Attorney General
and the department shall monitor, evaluate and assess the
covered entity and health care entity's compliance with the
terms and conditions of the voluntary agreement.
(e) Costs of monitoring.--
(1) The covered entity shall pay for the costs of the
Attorney General and the department's monitoring, evaluation
and assessment of the covered entity and health care entity's
compliance with the terms and conditions of the voluntary
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agreement during a monitoring period established under
subsection (d).
(2) The Attorney General, in consultation with the
department, shall determine the amount of the compliance
monitoring cost under this subsection, which shall be paid by
the covered entity and placed in an escrow account during the
monitoring period.
(f) Licensing.--A health care facility's license may not be
revoked, denied, impeded or cited for noncompliance due solely
to a filing or review under this chapter.
Section 305. Compliance and power of court.
If a person substantially fails to comply with the
notification requirement under section 302(a) or any request for
the submission of additional information or documentary material
under section 302(b) within the respective waiting period under
302(c), along with any extension granted under section 302(d),
the court may, in its discretion, do any or all of the
following:
(1) Order compliance.
(2) Extend the waiting period until there has been
substantial compliance.
(3) Grant other equitable relief as the court determines
necessary or appropriate.
Section 306. Powers and duties of Attorney General.
(a) Rules and regulations.--The Attorney General, in
coordination with the department, shall issue rules and
promulgate regulations as may be necessary to carry out and
enforce this chapter. The department and the Attorney General
shall ensure that the rules and regulations of the department
and the Attorney General are not in conflict.
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(b) Contracts.--
(1) The Attorney General may do any of the following:
(i) Contract with, share information with and
consult and receive advice from any Federal agency or
Commonwealth agency as the Attorney General deems
appropriate to implement this chapter.
(ii) At the Attorney General's sole discretion,
contract with experts or consultants to assist in
reviewing the proposed covered transaction.
(2) The cost of a contract entered into under paragraph
(1) must be an amount that is reasonable and necessary to
conduct the review and evaluation and in accordance with the
following:
(i) A contract may be on a noncompetitive bid basis.
(ii) Upon request, the Attorney General shall be
paid promptly for all contract costs by the entities
seeking approval or the covered transaction.
(3) The Attorney General shall be entitled to
reimbursement from the entities seeking consent for the
covered transaction for all actual, reasonable and direct
costs incurred in reviewing, evaluating and making a
determination under section 304(a), including administrative
costs. The entities seeking consent shall promptly pay the
Attorney General, upon request, for the costs.
(4) Notwithstanding the other provisions of this act, a
covered transaction may not be completed unless an agreement
has been executed between the Attorney General and the
covered entity, the health care entity or both for the
payment of costs in accordance with this subsection.
(c) Compliance.--If a covered entity or health care entity
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enters into a voluntary agreement with the Commonwealth under
section 304(c)(2):
(1) The Attorney General shall monitor, assess and
evaluate a covered entity and health care entity to ensure
compliance with the terms and conditions of the voluntary
agreement for the duration of the monitoring period
established under section 304(d).
(2) The Attorney General may request documents and other
information from a covered entity or a health care entity, or
both, to monitor compliance with the terms of the voluntary
agreement under section 304(c). Upon receiving a request from
the department, a covered entity or health care entity shall
comply with the request within 30 days.
(3) If the Attorney General determines that the health
care entity or covered entity has failed to comply with terms
of the voluntary agreement, the Attorney General may seek
immediate relief in Commonwealth Court to enforce the
conditions of the voluntary agreement and may impose any
penalties authorized by law or the terms of the voluntary
agreement.
(d) Agency cooperation.--
(1) The department, the Department of Aging, the
Department of Human Services and the Insurance Department
shall assist the Attorney General in reviewing the proposed
agreement and transaction, if requested, and shall comply
with any request for testimony or information as may be
necessary and appropriate for the Attorney General to review
a proposed covered transaction.
(2) The Attorney General shall comply with any request
for information from the Insurance Department as may be
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necessary and appropriate for the Insurance Department to
concurrently review a proposed transaction under Article XIV
of the act of May 17, 1921 (P.L.682, No.284), known as The
Insurance Company Law of 1921. Documents provided by the
Attorney General to the Insurance Department under this
paragraph shall be treated as confidential and are exempt
from public access under the act of February 14, 2008 (P.L.
6, No.3), known as the Right-to-Know Law.
(3) The Attorney General shall comply with any request
for information from the department as may be necessary and
appropriate to concurrently review a proposed transaction
under the act of July 19, 1979 (P.L.140, No.48), known as the
Health Care Facilities Act. Documents provided by the
Attorney General to the department under this paragraph shall
be treated as confidential and are exempt from public access
under the Right-to-Know Law.
Section 307. Powers and duties of department.
(a) Rules and regulations.--The department, in coordination
with the Attorney General, shall issues rules and promulgate
regulations as may be necessary to carry out and enforce this
chapter. The department and the Attorney General shall ensure
that the rules and regulations of the department and the
Attorney General are not in conflict.
(b) Compliance.--If a health care facility or covered entity
enters into a voluntary agreement with the Commonwealth under
section 304(c):
(1) The department shall monitor, assess and evaluate a
health care facility and covered entity to ensure compliance
with the terms and conditions of the voluntary agreement. If
the department determines the health care facility or covered
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entity has failed to comply with terms of the voluntary
agreement, the department shall immediately notify the
Attorney General of its findings.
(2) The department may request documents and other
information from a covered entity, a health care facility or
both to monitor compliance with the terms of the voluntary
agreement under section 304(c). Upon receiving a request from
the department, a covered entity or health care facility
shall comply with the request within 30 days.
(3) The department shall be reimbursed from an escrow
account established under section 304(e) for costs related to
the ongoing monitoring, assessment and evaluation of a health
care facility and covered entity's compliance with the terms
and conditions of the voluntary agreement during the
monitoring period.
Section 308. Confidential treatment.
(a) Confidentiality.--All information, documents, materials
and copies thereof in the possession or control of the Attorney
General or the department that are produced for, obtained by or
disclosed to the Attorney General or the department in the
course of a covered entity or health care entity complying with
the requirements of section 302(b), 306(c) or (d) or 307(b)
shall be privileged and given confidential treatment and shall
not be:
(1) Subject to discovery or admissible in evidence in a
private civil action.
(2) Subject to subpoena.
(3) Subject to the act of February 14, 2008 (P.L.6,
No.3), known as the Right-to-Know Law.
(4) Made public by the Attorney General, the department
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or any other person, except to regulatory or law enforcement
officials of this Commonwealth or other jurisdictions or
experts or consultants under contract with the Attorney
General under section 306(b), without the prior written
consent of the health care entity or covered entity to which
it pertains, unless the Attorney General, after giving the
health entity or covered entity that would be affected notice
and opportunity to be heard, determines that the interest of
the public is served by the publication, in which event it
may publish all or any part in such manner as it may deem
appropriate.
(b) Testifying in a civil action.--The Attorney General, the
department, any other Commonwealth agency or any individual or
person, who receives documents, materials or other information,
while acting under the authority of the Attorney General or the
department, or with whom the documents, materials or other
information are shared under this chapter, shall not be
permitted or required to testify in any private civil action
concerning any confidential documents, materials or information
covered under this section.
CHAPTER 10
MISCELLANEOUS PROVISIONS
Section 1001. Construction.
This act shall not be construed to:
(1) Narrow, abrogate or otherwise alter the authority of
the Attorney General to maintain competitive markets and
prosecute or enforce violations of antitrust and unfair trade
practices laws.
(2) Narrow, abrogate or otherwise alter the authority of
the department to oversee and approve or disapprove the
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change of ownership of or regulate a health care facility
under the act of July 1, 1979 (P.L.130, No.48), known as the
Health Care Facilities Act.
(3) Narrow, abrogate or otherwise alter the authority of
a professional licensing board to issue, suspend or revoke a
health care practitioners license or regulate the practice of
the health arts in this Commonwealth.
(4) Prohibit a Federal agency, Commonwealth agency or
other state agency from regulating a covered transaction or
joining as party in an action seeking to enjoin a covered
transaction, including the Insurance Department's
jurisdiction to review an exposed transaction under Article
XIV of the act of May 17, 1921 (P.L.682, No.284), known as
The Insurance Company Law of 1921.
Section 1002. Effective date.
This act shall take effect in 60 days.
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