Recently, Rhode Island Attorney General Peter F. Noronha announced a proposed Pre-Merger Notification Rule for Medical-Practice Groups that introduces disclosure requirements for certain transactions involving physician groups, hospital systems, and private equity investors in Rhode Island. The proposed rule is intended to enhance regulatory oversight of healthcare consolidations that could have implications for competition and patient access. By focusing on transactions that may not trigger federal review thresholds, the proposed rule, which relies on the Attorney General’s antitrust authority vested in R.I. Gen. Laws § 6-36-1, seeks to expand state-level scrutiny of mergers and acquisitions in the healthcare sector.
Key features of the proposed rule
The proposed rule applies to a range of transactions involving Rhode Island-based medical practice groups. “Medical-practice group” is defined in the proposed rule as “a single legal entity formed primarily for the purpose of being a physician group practice in any organizational form recognized by the state in which the group practice achieves its legal status, including, but not limited to, a partnership, professional corporation, limited-liability company, limited liability partnership, foundation, not-for-profit corporation, faculty practice plan, or similar association.”
Pursuant to the proposed rule, any transaction that results in a “material change” to the business or corporate structure of a medical-practice group requires prior written notification to the attorney general of such material change. The proposed rule defines “material change” broadly to capture various structural, ownership, and financial transactions that may affect competitive dynamics in the state’s healthcare market.
Transactions that would be subject to the notification requirements under the proposed rule include, but are not limited to:
- The merger, consolidation, or other affiliation of a medical-practice group that results in another medical-practice group comprised of eight (8) or more physicians, physician assistants, or nurse practitioners (Providers);
- The merger, consolidation, or other affiliation of a medical-practice group with a hospital, hospital system, medical foundation, or other entity organized or controlled by such hospital or hospital system;
- The acquisition of all or substantially all of the properties, assets, capital stock, membership interests, or other equity interests of a medical practice group by: (1) another medical practice group that results in a medical-practice group comprised of eight (8) or more Providers; or (2) a hospital, hospital system, captive professional entity, medical foundation, or other entity organized or controlled by such hospital or hospital system;
- The employment of all or substantially all of the physicians of a medical-practice group by: (1) another medical-practice group that results in a medical-practice group composed of eight (8) or more Providers; or (2) a hospital, hospital system, captive professional entity, medical foundation, or other entity organized or controlled by, or otherwise affiliated with, such hospital or hospital system;
- The acquisition of one (1) or more insolvent medical-practice groups by: (1) another medical-practice group that results in a medical-practice group with eight (8) or more Providers; or (2) a hospital, hospital system, captive professional entity, medical foundation, or other entity organized or controlled by, or otherwise affiliated with, such hospital or hospital system;
- The formation of a partnership, joint venture, accountable care organization, parent corporation, management services organization, or other organization created for administering contracts with health insurance carriers or third-party administrators or current or future contracting on behalf of one or more medical-practice groups;
- Transactions involving a significant equity investor that result in a change of ownership or control of a medical practice group.
Pursuant to the proposed rule, parties to such transactions would be required to provide written notice to the Attorney General at least sixty (60) days prior to the effective date of the transaction. The advance notice will enable the Attorney General’s office to review the transaction and consider whether such a transaction raises competitive concerns.
Compliance form
The Attorney General will post a form on its website that will prompt the parties to transactions required to be reported under the proposed rule to provide the following information:
- The parties involved in the transaction;
- A narrative describing the nature and purpose of the proposed material change;
- All locations where health services are presently being provided by each party to the transaction;
- Any new services and locations being considered by the parties upon the closing of the transaction;
- The anticipated effective date of the transaction; and
- Contact information for all parties to the transaction.
Penalties
The penalty for failing to provide the required notification under the proposed rule may be up to $200 per day (starting on the 59th day prior to the effective date of the transaction) and $100,000 for failing to provide notice after a transaction’s effective date. The Attorney General may also pursue injunctive relief to pause the closing of any proposed transaction until the parties comply with the rule.
How Rhode Island’s proposed rule fits within broader trends
Rhode Island’s proposed rule takes a focused approach to healthcare transactions. Washington’s Senate Bill 5122, which will become effective on July 27, 2025, requires state-level notification for transactions already subject to federal Hart-Scott-Rodino review, while Rhode Island introduces its own specific thresholds. In comparison, Massachusetts’s House Bill 5159, which went into effect on July 1, 2025, adopts a broader scope, applying to a wider range of healthcare entities, including hospitals, providers, insurers, and significant investors, and types of transactions, including nonprofit to for-profit conversions. The Massachusetts rule also requires pre-notification and market reviews with explicit attention to cost and health equity impacts. While both Massachusetts and Rhode Island introduce state-level scrutiny beyond federal requirements, Rhode Island’s proposal is more narrowly focused on medical-practice groups, with specific criteria aimed at consolidations involving provider groups and private equity ownership.
Compliance implications for healthcare providers and investors
The proposed rule could affect a range of entities contemplating mergers, acquisitions, or other business arrangements involving Rhode Island-based medical practices. Legal counsel and compliance teams would have to evaluate whether planned transactions meet the criteria for a “material change” under the proposed rule and prepare for the sixty- (60-) day notice requirement. Transactions that might not otherwise attract federal scrutiny, such as smaller physician group mergers or private equity acquisitions, could be subject to state-level review under this proposal.
Failure to comply with the proposed rule could result in penalties and delays. Entities should consider conducting a thorough review of transaction structures and timelines to determine whether notification would be required. Preparing the necessary documentation and engaging with the Attorney General’s office early in the transaction process might help mitigate potential compliance risks.
Looking forward
Rhode Island’s proposed Pre-Merger Notification Rule for Medical Practice Groups reflects a growing interest in monitoring healthcare consolidation at the state level, particularly when private equity companies are involved. By expanding pre-notification requirements to include a wider range of transactions, the proposal purports to help the Attorney General’s office identify potential competitive concerns before they materialize. For providers, investors, and legal advisors, understanding the scope and requirements of the proposed rule will be essential for navigating transactions involving Rhode Island-based medical practices. As the proposed rule advances through the regulatory process, stakeholders should remain attentive to further developments and consider early compliance planning for upcoming transactions.