SB 3175: SHPDA; Health Care Entity Transactions; Market Oversight; Mergers and Acquisitions; Vertical Integration; Legislative Approval

THE SENATE	S.B. NO.	3175
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to health care market oversight.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that consolidation in the health care industry, including horizontal and vertical integration among hospitals, health insurers, physician organizations, and other health care entities, has accelerated nationwide and within the State.  Evidence from multiple jurisdictions demonstrates that this consolidation frequently results in increased health care costs, higher insurance premiums, reduced competition, diminished patient choice, workforce instability, and the restriction or elimination of essential health care services, without corresponding improvements in quality or access.

     The legislature further finds that vertically integrated health care transactions present unique risks to the public interest because they combine control over the financing, delivery, and management of care within a single corporate structure, thereby enabling cost shifting, preferential contracting, patient steering, service denial, and the displacement of higher-cost or higher-need patients onto public and safety-net health systems.  These effects disproportionately burden the State, counties, and taxpayers, and undermine the stability of the State's public hospitals and health programs.

     The legislature recognizes that federal antitrust enforcement alone is insufficient to address these risks, particularly where transactions fall below federal reporting thresholds or where competitive harms are localized, cumulative, or indirect.  The legislature finds that states have increasingly exercised their sovereign authority to establish health care–specific transaction review frameworks that supplement, but do not preempt or conflict with, federal antitrust law.  This Act is informed by and incorporates best practices from other state oversight models, including pre-transaction notice requirements, comprehensive public-interest review standards, and enforceable approval authority.

     The legislature further finds that the health care market structure directly affects affordability, access, and public expenditures, and therefore constitutes a matter of core state policy appropriately subject to legislative oversight.  While administrative agencies are best positioned to conduct technical and economic analyses of proposed transactions, the ultimate determination of whether certain large-scale, vertically integrated health care mergers are consistent with the public interest is a policy judgment that warrants legislative review where specified thresholds of market concentration and cost impact are met.

     Accordingly, the purpose of this Act is to:

     (1)  Establish a state oversight framework for material health care entity mergers, acquisitions, and other consolidation transactions;

     (2)  Require advance notice and public interest review by the state health planning and development agency; and

     (3)  Require legislative approval, by concurrent resolution, of certain vertically integrated health care transactions that meet specified market share and pricing impact thresholds.

     SECTION 2.  Chapter 323D, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part   .  HEALTH CARE MARKET OVERSIGHT

     §323D-    Definitions.  As used in this part:

     "Health care entity" means any hospital, hospital system, health insurer, health maintenance organization, physician organization, provider group, ambulatory surgical center, or other entity licensed or authorized to provide or finance health care services in the State.

     "Material health care transaction" means a merger, acquisition, affiliation, joint venture, consolidation, asset transfer, or other arrangement that results in a change of control, governance, or material influence over a health care entity.

     "Vertical consolidation" means a material health care transaction between entities operating at different levels of the health care supply chain, including but not limited to insurers and providers, hospitals and physician organizations, or entities that finance, manage, or deliver health care services.

     §323D-    Health care transactions; notice required.  (a)  A health care entity shall not enter into a material health care transaction unless the entity provides written notice to the state agency no later than one hundred eighty days before the proposed effective date of the transaction.

     (b)  The notice shall include, at a minimum:

     (1)  A detailed description of the transaction structure and governance changes;

     (2)  Identification of all parties to the transaction and affiliated entities;

     (3)  Current and projected market shares by service line and geographic area;

     (4)  Historical and projected pricing, reimbursement rates, and premium impacts;

     (5)  Impacts on access to care, the workforce, and service availability;

     (6)  Any planned changes to service lines, facilities, or patient eligibility criteria; and

     (7)  Any additional information required by the state agency.

     §323D-    State agency review.  (a)  The state agency shall conduct a comprehensive review of each material health care transaction to determine whether the transaction is in the public interest.

     (b)  In conducting its review, the state agency shall consider whether the transaction:

     (1)  Is likely to increase health care costs, premiums, or out-of-pocket expenses;

     (2)  Will reduce access to care or essential services;

     (3)  Will substantially lessen competition or increase market concentration;

     (4)  Will negatively affect health care workers or labor conditions;

     (5)  Will shift costs or patient burden to the State or county health systems; or

     (6)  Otherwise poses a risk to the health, safety, or welfare of the public.

     (c)  The state agency may approve, approve with conditions, or disapprove the transaction.

     §323D-    Legislative approval.  (a)  Notwithstanding any law to the contrary, no material health care transaction involving vertical consolidation shall take effect until approved by the legislature under subsection (c) whenever the transaction:

     (1)  Would result in a combined entity controlling twenty-five per cent or more of any relevant health care service market or insurance market within the State or any county; and

     (2)  Would result in, or is reasonably projected to result in:

          (A)  Price increases exceeding medical inflation benchmarks;

          (B)  Premium growth exceeding state cost growth targets; or

          (C)  Increased expenditures by the State, counties, or public health programs.

     (b)  Upon completion of its review, the state agency shall transmit a report to the legislature containing:

     (1)  Findings and conclusions regarding the transaction;

     (2)  Any recommended conditions or restrictions to impose on the transaction; and

     (3)  A recommendation for approval or disapproval.

     (c)  A transaction subject to this section shall not be implemented unless approved by a concurrent resolution adopted by the legislature.

     (d)  Failure of the legislature to approve the transaction shall constitute a denial.

     §323D-    Penalty.  (a)  A health care entity that consummates a material health care transaction without approval as required under this part shall be subject to:

     (1)  Civil penalties not to exceed $1,000,000 for each separate offense;

     (2)  Injunctive relief, including unwinding of the transaction; and

     (3)  Any other relief deemed appropriate by a court of competent jurisdiction.

     (b)  Each date of violation shall constitute a separate offense.

     §323D-    Rules.  The state agency may adopt rules pursuant to chapter 91 necessary for the purposes of this part."

     SECTION 3.  This Act shall take effect upon its approval.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

SHPDA; Health Care Entity Transactions; Market Oversight; Mergers and Acquisitions; Vertical Integration; Legislative Approval

 

Description:

Establishes a state oversight framework for material health care mergers, acquisitions, and other consolidation transactions. Requires advance notice and public interest review by the State Health Planning and Development Agency.  Requires legislative approval, by concurrent resolution, of certain vertically integrated health care transactions that meet specified market share and pricing impact thresholds.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.