Illinois Expands Governmental Oversight on Private Equity Investments in Healthcare
Legal Alerts
9.02.26
On August 7, 2026, Illinois Governor JB Pritzker signed House Bill 500, Public Act 104-0782 (“Act”) into law, effective January 1, 2027. The Act significantly broadens the scope of healthcare transactions that require notification to the Illinois Attorney General at least 30 days before closing. The Act also explicitly covers private equity companies that directly or indirectly own health care entities, including through management services organizations (“MSOs”) and dental services organizations (“DSOs”). Further details on the key changes are below:
Expansion of the definition of “covered transaction”
Previously, Illinois law only covered any merger, acquisition, or contracting affiliation between two or more health care facilities or provider organizations not previously under common ownership or contracting affiliation. The Act expands coverage to any such transaction involving two or more of such entities by clarifying covered transactions include transactions where “the parties to the transaction are not themselves a health care facility or provider organization but own or control, directly or indirectly, one or more of the two or more health care facilities or provider organizations that” the proposed transaction will bring “under common ownership or contracting affiliation… including if parties to the covered transaction are private equity companies.” This language targets transactions in which a party to the deal has direct or indirect ownership of healthcare entities, including through MSOs and DSOs, not just deals directly between healthcare entities.
The Act also now expressly defines a “private equity company” as “any company or partnership that collects capital investments from individuals or entities and purchases, as a parent company, at any level of corporate ownership, or through another entity or entities so that the company completely or partially owns or controls a direct or indirect ownership share of an Illinois health care entity or an out-of-state health care entity that generates $10 million or more in annual revenue from patients residing in this State.”
Next Steps
The Act’s expansion of prior regulations goes into effect on January 1, 2027. These new regulations confirm that private equity sponsors, MSOs, and DSOs should thoroughly review proposed or pending contractual arrangements and protocols with affiliated practices to ensure compliance with these new requirements for future transactions. Dykema has extensive experience structuring and executing management arrangements in Illinois and across the country. If you would like legal counsel on your MSO or DSO arrangements or M&A transactions, please contact Dykema as soon as possible.
