New Mexico’s proposed measures for hospital merger review

Introduction

A new bill bringing greater oversight to hospital deals is under consideration in the New Mexico state legislature. On February 13, Senate Bill 14, “The Health Care Consolidation and Transparency Act,” headed out of the Senate Health and Public Affairs Committee to the Senate Judiciary Committee.[1]

The Health Care Consolidation and Transparency Act would give important oversight authority to the New Mexico’s Office of the Superintendent of Insurance (OSI). Before closing a deal involving a New Mexico hospital, the transacting parties are required to give notice to OSI, which can, after review, either approve (with or without conditions) or disapprove the transaction.[2]

These oversight powers are intended to ensure the deal does not increase costs, reduce healthcare access or lower quality, and that the transaction does not have substantial anti-competitive effects. [3]

Health care consolidation and transparency act

New Mexico legislators initially gave temporary oversight authority to the OSI last year with Senate Bill 15 — known as the Health Care Consolidation Oversight Act, co-authored by State Senator Duhigg and Representative Szczepanski — which was signed into law in March 2024.[4]

The temporary law is set to expire at the beginning of July, but initiatives have been ongoing to update the law and make it permanent.[5]

Last summer, OSI held public feedback sessions in communities throughout New Mexico from July through September. The sessions were held in Santa Fe, Las Cruces, as well as rural New Mexico communities such as Gallup, Alamogordo, Las Vegas, and Taos.[6]

The sessions included discussions on the proposal’s overarching goals and what policymakers should consider in updating the law, including scope of notice requirements, what facts to consider for merger review, and how to handle violations and violation appeals among other topics.[7]

The updated bill that would make the oversight authority permanent was pre-filed in the New Mexico legislature in January 2025[8] and has headed out of its first committee in an amended form to the Senate Judiciary Committee.[9]

While the Democrat-led bill has moved forward, it does so with the qualifier of, “Do Not Pass but without recommendation on Committee Substitution,”[10]  after the one Democrat who didn’t support the bill motioned to pass it without recommendation. This leaves the bill in the hands of the Judiciary Committee to amend it. Republican state senator David Gallegos voted against the no recommendation, stating, “I regretfully stand in opposition to make someone else repair a bill. I find fault in that.”[11]

This leaves the bill in a precarious position. It had already been whittled down from its original version, which prescribed oversight to a wider range of healthcare entities.[12]

Key features in the current version of the bill heading to the Judiciary Committee include:

• granting OSI oversight powers to approve, approve with conditions, or disapprove certain types of healthcare transactions involving hospitals and insurance companies;[13]
• creating notice requirements for transacting parties;[14]
• requiring a comprehensive review of certain transactions depending on factors such as whether the transaction could result in anticompetitive effects or reduced quality and access to care;[15]
• creating annual reporting requirements around ownership of hospitals and healthcare providers;[16] and
• creating whistleblower protections for healthcare workers, patients, and other groups who come forward to report alleged “unlawful and improper acts” at hospitals.[17]

Private equity in New Mexico healthcare

The oversight proposal comes as some New Mexico legislators cite private equity ownership as the key contributor to a lack of healthcare workers in the state.[18]

New Mexico has been ranked among the U.S. states that are most threatened by the negative impacts of private equity, according to the Private Equity Stakeholder Project’s (PESP’s) Private Equity Risk Index, which found that private equity controls 24.4% of hospitals and 35.3% of nursing homes in New Mexico. Additionally, 61.4% of the state’s population lives in a metro area where a single private equity firm controls over 30% market share of one or more physician specialties.[19]

The findings from the Risk Index were cited in a recent report from the Democratic members of the U.S. Senate Joint Economic Committee, which noted that New Mexico’s ranking was “largely due to the outsize role PE firms have in the state’s healthcare system.”[20]

In June 2024, NBC News highlighted thirteen cancer patients who said they were met with denials of care or demands for up-front payment from New Mexico’s Memorial Medical Center, which since 2023 has been run by Lifepoint Health, an operator owned by private equity firm Apollo Global Management.[21]

According to a 2024 PESP report, Apollo’s ownership of two major hospital systems, including Lifepoint, has degraded healthcare services, hurt workers, and put patients at grave risk.[22] Apollo was also examined in the January 2025 bipartisan Senate Budget Committee report, which documented a pattern of private equity firms prioritizing profits at the expense of patient care and called for greater oversight to address those harms.[23]

PESP’s Private Equity Hospital Tracker identified 17 private equity-owned hospitals in New Mexico as of April 2024, including three owned by Apollo. This represents 27.4% of the state’s 62 total hospitals.[24]

Overview of the proposed state law

Covered transactions & entities:  The latest version of the bill, which passed out of the Senate Health and Public Affairs Committee on February 13, grants oversight to the Office of Superintendent of Insurance (OSI) over three types of transactions:

• proposed transactions involving change in control of a New Mexico hospital;
• proposed acquisitions of healthcare provider organizations by a hospital or a person that is owned by or affiliated with a hospital; and
• proposed acquisitions of one or more healthcare provider organizations located, whether in whole or in part, in New Mexico, or the employment of a healthcare provider by a health insurer or by a person that is owned or affiliated with a health insurer.[25]

The law defines “transaction” to include when a covered healthcare entity or hospital merges with, acquires, affiliates or contracts with, or forms an agreement with another party, resulting in the change of ownership or control of a healthcare facility.

As such, the proposed law may capture some joint ventures if they involve a change in control of a New Mexico hospital. Control is defined as the “the power to direct or cause the direction of the management and policies of a person, in whole or substantial part, whether directly or indirectly, through the ownership of voting securities, through license or lease agreements, by contract or otherwise[.]”[26]

Private equity firms have increasingly used joint ventures with non-profit health systems as a growth strategy, giving the firms access to trusted brands and geographic markets they may otherwise not readily access. Joint venture partnerships may help both parties to evade antitrust scrutiny compared to traditional merger and acquisition growth strategies.[27] This bill could help to bring greater scrutiny to some joint venture transactions and their potential impacts on competition and healthcare costs, quality, and access.

The bill also includes a “sale, mortgage, lease, license, transfer or other agreement involving all or substantially all the patient care facilities of a hospital or the real estate on which the hospital is located” under the definition of a transaction.[28] This definition would cover sale-leasebacks, a common private equity tactic used to extract wealth out of a healthcare facility which often leaves the facility or health system on the hook for long term lease liabilities on real estate it used to own. The current language in Senate Bill 14 is ambiguous as to what extent it would address the extractive harms of sale-leasebacks, as these transactions on paper would likely not indicate a result in change of control of a hospital and thus be excluded from review.

Notice requirements: Parties involved in a healthcare transaction covered by this bill must provide notice of their proposed transaction to the Office of the Superintendent of Insurance (OSI). Such notice must include a list of the parties and agreement terms, as well as a statement describing anticipated impacts from the deal, including impacts to patients and healthcare workers, commitments for essential services and any plans the parties have for health entity real estate, as well as organizational charts for each party identifying direct and indirect parents, subsidiaries, and affiliates, including significant equity investors.[29]

OSI must complete a preliminary review of the transaction no later than 60 days after receiving notice. If comprehensive review is necessary, the office shall complete the review within 90 days or 210 days if an administrative hearing is required.[30]

Most transactions are unlikely to need more than a preliminary review. In determining whether a transaction goes to a higher level of review, OSI must consider the interests of patients and consumers, solvency of the healthcare entity, potential negative effects on healthcare access and healthcare workers, and other factors the office deems necessary for review.[31]

Annual reporting requirements: The bill also includes annual reporting requirements for hospitals and healthcare organizations, including organizational charts and disclosure of any person(s) with a controlling interest.[32] Beginning in October 2026 OSI will annually prepare a public summary and analysis of the ownership trends for hospitals and healthcare provider organizations in New Mexico. [33]

Whistleblower protections: SB 14 requires that every hospital shall “adopt, promulgate, and enforce” a whistleblower policy that meets minimum requirements outlined in the bill to protect whistleblowers from retaliation for reporting “unlawful and improper acts” by the hospital. “Whistleblower” is defined to include healthcare providers; patients and their representatives or guardians; and officers, employees, contractors, subcontractors or authorized agents of a hospital who reveal information about an unlawful or improper act by the hospital.[34]

Penalties for noncompliance: Hospitals that fail to stop or correct a retaliatory action against a whistleblower may be required to pay a fine of up to fifteen thousand dollars ($15,000) for each day during which the failure to stop or correct the retaliatory action continues past the deadline for stopping or correcting the action.[35]

The bill also allows for the OSI to issue administrative fines to those who violate “a material or substantive provision of the Health Care Consolidation and Transparency Act or order or rule of the superintendent issued or adopted in accordance with that act.”  These fines may not exceed $5,000 for each instance of violation unless the violation is willful and intentional, in which case the superintendent may assess a fine of up to $10,000 for each violation. [36]

For parties that fail to provide notice of transactions in accordance with the law, OSI can impose an administrative fine of not more than fifteen thousand dollars ($15,000) per day from the date on which the notice was required to be submitted to the superintendent to the date of issuance of an order approving, approving with conditions or disapproving the transaction or acquisition.[37]

Strengthening SB 14

The fate of Senate Bill 14 remains uncertain as it heads to the Judiciary Committee.

The Health Care Consolidation and Transparency Act has the potential to be an important step forward for New Mexico to better regulate hospital deals in order to better protect patients from increased costs and reduced access to quality care.

Notably, this bill will continue to allow private equity firms to acquire hospitals in New Mexico as long as OSI determines the transaction will not result in a significant reduction in the availability, accessibility, affordability or quality of care for patients of healthcare services, nor result in anticompetitive impacts.[38] This may address concerns that the law would bar private equity from acquiring struggling hospitals with the purported goal of investment and improvement.

In January the governor of Massachusetts signed into law “An Act Enhancing the Market Review Process,” which established broad reporting requirements for healthcare providers and steep penalties for noncompliance. A recent PESP blog discusses provisions in the Massachusetts law such as its relatively broad financial reporting requirements. The law is also the first of any U.S. state law to prohibit sale-leaseback transactions of acute care hospitals.

New Mexico policymakers considering improvements to the Health Care Consolidation and Transparency Act should adopt relevant provisions from Massachusetts and other state laws seeking to address known risks stemming from lack of private equity business practices.

The most efficient way to prevent private equity looting is updating laws to make the looting practices, themselves, illegal, such as banning sale-leasebacks of hospital real estate, and prohibiting debt-funded dividends and the use of excessive debt to fund buyouts.

In the absence of amending SB 14 to prohibit the above-mentioned tactics completely, regulators tasked with reviewing transactions under the Health Care Consolidation and Transparency Act should consider placing conditions on approvals, including:

• Anti-looting measures. Prohibit owners from paying themselves debt-funded dividends (i.e., dividend recapitalizations) or dividends from hospital real estate sales.
  • Sale-leaseback transactions of hospitals should be prohibited, entirely, or if permitted, investors should be barred from collecting dividends from the proceeds;
  • Any allowed dividends should be limited to a percentage of overall profit and should not be funded from debt; and
  • The ratio of debt-to-equity used to finance hospital buyouts should be limited.
• Fee limits. Investor-owners may not charge arbitrary fees to hospitals, including any management fees for services not provided. Investors should be required to report transaction fees and ongoing management fees collected from facilities to OSI.
• Staffing requirements. Requirement of minimum staffing standards to ensure safe and high-quality care for patients in hospitals and healthcare facilities.

The bill includes important post-transaction monitoring provisions which are necessary to ensure the transacting parties comply with conditions required by OSI. The office may audit books, documents, records, and data of a transacting party to ensure compliance with conditions established by the office. And parties to approved and conditionally approved transactions must submit one-, two-, and five-year reports to OSI to ensure compliance.[39]

For noncompliant parties, the administrative fines outlined in the bill are a first step to holding them accountable. But there should also be real penalties for failing to comply including civil and/or criminal charges for executives and investors who willfully and intentionally fail to comply with transaction conditions and other relevant state regulations and laws.

Resources

[1] Morée, Susan. “A Bill to Bring Transparency to Hospital Transactions Heads to Senate Judiciary Committee.” New Mexico Political Report, February 13, 2025. http://nmpoliticalreport.com/2025/02/13/a-bill-to-bring-transparency-to-hospital-transactions-heads-to-senate-judiciary-committee/. LegiScan. “New Mexico SB14 | 2025 | Regular Session.” Accessed February 19, 2025. https://legiscan.com/NM/bill/SB14/2025.

[2] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 12

[3] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 1, p. 19.

[4] LegiScan. “New Mexico SB15 | 2024 | Regular Session.” Accessed February 4, 2025. https://legiscan.com/NM/bill/SB15/2024.

[5] Megan Myscofski. “New Law Gives State Officials More Oversight on Hospital Acquisitions • Source New Mexico.” Source New Mexico, May 30, 2024. https://sourcenm.com/2024/05/30/new-law-gives-state-officials-more-oversight-on-hospital-acquisitions/.

[6] New Mexico Office of Superintendent of Insurance. “Health Care Consolidation.” Accessed February 4, 2025. https://www.osi.state.nm.us/pages/misc/health-care-consolidation.

[7] New Mexico Office of Superintendent of Insurance. “Health Care Consolidation.” Accessed February 4, 2025. https://www.osi.state.nm.us/pages/misc/health-care-consolidation.

[8] Susan Morée. “Dem Legislators Push Bill Taking on Private Equity in Health Care.” New Mexico Political Report, January 23, 2025. http://nmpoliticalreport.com/2025/01/23/dem-legislators-push-bill-taking-on-private-equity-in-health-care/. LegiScan. “New Mexico SB14 | 2025 | Regular Session.” Accessed February 19, 2025. https://legiscan.com/NM/bill/SB14/2025.

[9] Morée, Susan. “A Bill to Bring Transparency to Hospital Transactions Heads to Senate Judiciary Committee.” New Mexico Political Report, February 13, 2025. http://nmpoliticalreport.com/2025/02/13/a-bill-to-bring-transparency-to-hospital-transactions-heads-to-senate-judiciary-committee/.

[10] LegiScan. “New Mexico SB14 | 2025 | Regular Session.” Accessed February 19, 2025. https://legiscan.com/NM/bill/SB14/2025.

[11] Morée, Susan. “A Bill to Bring Transparency to Hospital Transactions Heads to Senate Judiciary Committee.” New Mexico Political Report, February 13, 2025. http://nmpoliticalreport.com/2025/02/13/a-bill-to-bring-transparency-to-hospital-transactions-heads-to-senate-judiciary-committee/.

[12] 57th State Legislature, First Session, 2025 . “Senate Bill 14.” January 21, 2025. https://legiscan.com/NM/text/SB14/2025, pp. 9-11.

[13] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 1, p. 19.

[14] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 8-9.

[15] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 19.

[16] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 30-32.

[17] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 24-27.

[18] Susan Morée. “Lawmakers Announce Bills to Address Health Care Worker Shortage.” New Mexico Political Report, January 14, 2025. http://nmpoliticalreport.com/2025/01/14/lawmakers-announce-bills-to-address-health-care-worker-shortage/.

[19] Private Equity Stakeholder Project. “New Mexico.” Private Equity Risk Index, April 9, 2024. https://privateequityrisk.org/state/new-mexico/.

[20] Chairman Senator Martin Heinrich. “Predatory Private Equity Practices Threaten Americans’ Health and the Economy – Predatory Private Equity Practices Threaten Americans’ Health and the Economy.” United States Joint Economic Committee, July 23, 2024. https://www.jec.senate.gov/public/index.cfm/democrats/2024/7/predatory-private-equity-practices-threaten-americans-health-and-the-economy.

[21] Gretchen Morgenson. “Cancer Patients Say This Hospital Denied Them Care.” NBC News, June 5, 2024. https://www.nbcnews.com/health/cancer/cancer-patients-say-new-mexico-hospital-turned-them-away-rcna147184.

[22] Private Equity Stakeholder Project PESP. “New Report Details Harm Caused to Healthcare Industry by Apollo,” January 11, 2024. https://pestakeholder.org/news/new-report-details-harm-caused-to-healthcare-industry-by-apollo/.

[23] Private Equity Stakeholder Project PESP. “Bipartisan US Senate Investigation Exposes Harms of Private Equity Hospital Ownership,” January 10, 2025. https://pestakeholder.org/news/bipartisan-senate-investigation-exposes-harms-of-private-equity-hospital-ownership/.

[24] Private Equity Stakeholder Project PESP. “PESP Private Equity Hospital Tracker.” Accessed February 4, 2025. https://pestakeholder.org/private-equity-hospital-tracker/.

[25] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 6-7.

[26] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 3.

[27] Browder, Brian, Bill Katz, and Alexander Dudley. “Avoiding Antitrust Enforcement in Health Care Joint Ventures.” Holland & Knight, June 13, 2023. https://www.hklaw.com/-/media/files/insights/publications/2023/06/avoiding-antitrust-enforcement-in-health-care-joint-ventures.pdf?la=en&rev=dbf428c005b24ac3b16322d2084e2f47; “Recent Trends & Developments in Health Care Joint Ventures: Nonprofit/For-Profit Joint Ventures | Insights | Ropes & Gray LLP.” Accessed February 6, 2025. https://www.ropesgray.com/en/insights/podcasts/2023/10/recent-trends-and-developments-in-health-care-joint-ventures-nonprofit-for-profit-joint-ventures.

[28] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 5-7.

[29] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 8-11.

[30] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 14-15.

[31] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, p. 15-16.

[32] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, p. 31.

[33] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, p. 32.

[34] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, pp. 24-28.

[35] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, p. 27.

[36] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, p. 28.

[37] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, pp. 28-30.

[38] 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Legislation/Legislation?chamber=S&legType=B&legNo=14&year=25, p. 19.

[39]See 57th State Legislature, First Session, 2025. “Senate Health and Public Affairs Committee Substitute for Senate Bill 14.” Accessed February 13, 2025. https://www.nmlegis.gov/Sessions/25 Regular/Committee_Subs_And_Amendments/SB0014PA1 230523.pdf, pp. 22-23.