Senate committee advances bill to review hospital acquisitions amid rural hospital concerns

A Senate committee advanced legislation that would create a state review process for certain transactions involving hospitals and health care provider organizations, a move supporters say is meant to protect access and quality of care in New Mexico and opponents say could deter investment in rural hospitals.

The bill, presented by Senator Duhigg and discussed at length by the Office of Superintendent of Insurance (OSI) and the Health Care Authority (HCA), would require notice to the state and permit review of proposed changes in control of hospitals and similar health care entities when an insurer or an insurer-affiliated company is involved. The OSI and HCA would consult outside experts and the attorney general’s office in reviews, and the bill includes emergency exceptions, a 15% control threshold for presumed influence and civil fines for violations.

Supporters said the oversight addresses a pattern of transactions, often involving private equity or out-of-state investors, that they say can lead to service reductions and financial structures that saddle hospitals with debt. “The purpose of this goal is to make sure that when these transactions happen, it's not at the expense of the accessibility, availability, ability, and quality of health care in New Mexico,” Senator Duhigg said when introducing the measure.

Opponents, including Senator Hickey and several hospital leaders who testified or were cited by senators, warned the bill could make New Mexico a less attractive place for capital to invest and risk closing or weakening rural hospitals. “I think really in the long run, this bill is gonna be harmful to New Mexico and the people, that we will do more harm in quality and access to care, passing this bill in this form,” Senator Hickey said during debate.

OSI officials told the committee the office already has experience hiring outside specialists for complex transactions in the insurance context and has used actuaries, financial and legal consultants, and HCA input in past reviews. Elizabeth Johnson, deputy counsel at OSI, said OSI “employ[s] several experts” and had engaged outside counsel with M&A expertise while drafting the bill. The superintendent said she included $1.5 million in her budget request to support staff and contracting for transaction reviews and described a likely initial staffing footprint similar to other states — roughly three specialists with complementary expertise.

The bill’s key features discussed in the hearing include: - Scope: Applies to proposed acquisitions of one or more health care provider organizations located in New Mexico, and to instances where a provider would be employed by an insurer or insurer-affiliated entity. The committee record shows opt-in carve-outs and narrowed application for independent physician groups unless they are acquired by an insurer or affiliated entity. Optum (owned by UnitedHealth) and other insurer-affiliated acquisitions were discussed as examples of transactions the bill would capture. - Expertise and costs: OSI said parties would pay for most outside experts historically used in insurance M&A reviews; OSI also requested budgeted funds ($1.5 million) to hire transaction- and health-care–savvy staff to oversee reviews. - Presumption of control: The draft defines a presumption of control at a 15% ownership or voting threshold, a negotiated figure discussed in committee debate. - Conditions and monitoring: The bill creates a tiered approval process that can approve, deny, or approve with conditions, and it allows monitoring and a process for parties to seek amendments to conditions post-closing if unforeseen problems arise. - Emergency exception and timelines: An emergency clause would allow a party at imminent risk of closure to bypass the normal review process. The bill includes procedural timelines for review; sponsors said the effective date would follow statutory timing (90 days after adjournment in committee testimony).

Committee members repeatedly questioned how OSI and HCA would vet and hire “experts” and how the state would avoid unintentionally deterring investment. OSI and its counsel pointed to existing insurance-holding–company review practices, previous transaction reviews (the committee discussed the Presbyterian–Unity matter and an M&A involving a behavioral health firm), and consults with other states such as Oregon to shape staffing and procedures. OSI counsel said “we employ several experts” and cited a working relationship with a New York M&A specialist firm used during drafting.

After debate and several unsuccessful procedural attempts to delay action, the committee voted to advance the bill to Senate Judiciary with no recommendation. Committee members who pressed for delay cited the need for more time to consult lenders, private investors and rural hospitals about whether the state can write oversight that protects access without discouraging capital. Supporters said the bill would attract “healthy investment” and limit exploitative transactions that leave hospitals saddled with debt.

The bill will next be considered by the Senate Judiciary Committee.

Votes at a glance: - Motion to table the bill: moved by Senator Hickey; failed (committee roll call and discussions recorded; motion did not carry). The committee record shows debate on both procedural and policy grounds before the chair called for a final vote. - Motion to pass the bill with no recommendation: moved by Senator Hickey, seconded by the chair; outcome: passed on a committee roll call and the measure was sent to Senate Judiciary with a 6–4 tally recorded in the hearing.