A bill passed by the Connecticut General Assembly on May 7, the final day of its 2014 session, has received lots of publicity for making it easier for nonprofit hospitals to convert to for-profit status in Connecticut. However, the bill, which is expected to be signed into law by Governor Malloy, also has important implications for medical practice acquisitions in Connecticut.
Effective October 1, 2014, the parties to any asset acquisition or merger of medical group practices that results in a medical group practice of eight or more physicians must submit written notice to the Connecticut Attorney General at least 30 days prior to closing. The notice must describe (1) the transaction, (2) the names and specialties of each physician of the target and acquiring medical groups, (3) the names of the entities that will provide services after the transaction, (4) the address of each location at which services will be provided, (5) a description of the services provided at each location, and (6) the primary service area to be served by each location. A medical group practice is defined to include a group of two or more physicians organized as a partnership, professional corporation, or limited liability company in order to render professional services.
In addition, beginning this year and annually thereafter, on or before December 31 each group practice consisting of 30 or more physicians must file with the Connecticut Attorney General and the Commissioner of Public Health a written report including (1) the name and specialty of each physician practicing medicine in the group practice, (2) the names of the business entities providing services as part of the group practice and each address where these services are provided, (3) a description of the services provided at each such location, and (4) the primary service area served by each such location.
Finally, effective July 1, 2014, the transfer of ownership of a group practice of eight or more full-time equivalent physicians to an entity other than a physician or another group practice will require a certificate of need (CON). In evaluating a CON, “there shall be a presumption in favor of approving the certificate of need application for a transfer of ownership of a group practice . . . when an offer was made in response to a request for proposal or similar voluntary offer for sale.” A transition rule exempts certain transactions that close before September 1, 2014.
The criteria for granting a CON have been expanded to include a determination of whether “the proposal will not negatively impact the diversity of health care providers and patient choice in the geographic region.”