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H 7172Medical Services

Health and Safety - Health Care and Social Services Transaction Review and Significant Equity Investor Disclosure Act

This bill requires private equity investors to disclose financial details before acquiring Rhode Island healthcare or social service providers.

Held for study
Population
Affected
65
Email Legislator
Introduced Jan 21, 2026Committee House Corporations

Plain-English Summary

This legislation establishes a review process for transactions where private equity firms or significant investors acquire healthcare facilities, behavioral health organizations, or child service providers in Rhode Island. It requires these entities to provide at least 60 days of notice to the Department of Health and the Attorney General before a change in ownership occurs. The bill mandates the disclosure of ownership structures and financial details. It also allows state regulators to require post-transaction reporting for up to five years to monitor the impact on costs and services. Non-compliance can result in fines of up to $10,000 per day.

For younger readers

Sometimes, big investment companies buy businesses that take care of people, like doctor's offices or homes for children who need help. This bill creates a rule that says these big companies must tell the government who they are and how they will pay for the business before they are allowed to buy it. They have to share this information 60 days before the sale happens. This helps the state make sure the new owners will do a good job. If the companies don't follow the rules, they have to pay a very large fine as punishment.

Who & Where It Applies

Impacted groups
Private equity firmsHealthcare facilitiesBehavioral health organizationsDepartment of HealthResidential treatment facilities
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
Amount unknown

Bill Analysis

Both viewpoints
For Progressives
  • Protects vulnerable populations by mandating transparency when profit-driven private equity firms attempt to acquire essential social services and behavioral health organizations.
  • Empowers state regulators to monitor and assess the long-term impact of corporate acquisitions on workforce stability, cost of care, and service availability for the community.
  • Increases corporate accountability by requiring the disclosure of complex ownership structures and financing sources that are often used to hide the true intent of investors.
  • Lacks the explicit authority to block or reject transactions that are deemed harmful to the community, relying primarily on disclosure rather than direct intervention.
  • Exempts venture capital firms that fund startups, which could leave a loophole for certain types of profit-motivated investors to enter the market without the same level of scrutiny.
  • Does not mandate a formal role for healthcare workers, unions, or community members in the review process of these material changes.
For Conservatives
  • Ensures that foreign or outside entities cannot secretly acquire critical state infrastructure and healthcare systems without public knowledge and local oversight.
  • Includes statutory protections for confidential commercial and financial information, ensuring that proprietary business strategies remain private despite the reporting requirements.
  • Promotes a fair market by preventing large, opaque investment groups from using hidden financial leverage to unfairly dominate local healthcare providers.
  • Imposes significant bureaucratic red tape and government interference on private business transactions, infringing upon the principles of the free market.
  • Grants excessive power to the Attorney General and Department of Health to harass private businesses with demands for ongoing post-transaction reporting for up to five years.
  • Threatens private enterprise with exorbitant civil penalties of up to $10,000 per day, which is a disproportionate punishment that could destroy businesses.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 79 additions

SECTION 1. Legislative findings. The general assembly finds that:

(1) Private equity and similar investment structures increasingly own or control entities delivering health care and essential social services in this state;

(2) Certain transactions involving changes in ownership or control may materially affect cost, access, quality, workforce stability, and continuity of care or services; and

(3) Transparency regarding ownership, governance, and financial structure is necessary to protect the public interest.

SECTION 2. Title 23 of the General Laws entitled "HEALTH AND SAFETY" is hereby amended by adding thereto the following chapter: 23-17.31-1. Short title. This chapter shall be known and may be cited as the “Health Care and Social Services Transaction Review and Significant Equity Investor Disclosure Act.” 23-17.31-2. Definitions. As used in this chapter:

(1) “Control” means the power, directly or indirectly, to direct or cause the direction of the management or policies of an entity, whether through ownership of voting securities, contract, governance rights, management agreement, or otherwise.

(2) “Covered care entity” means any of the following operating in this state:

(i) A healthcare facility or healthcare provider licensed, certified, or registered by the department of health pursuant to title 23;

(ii) A behavioral health organization, residential facility, program, or provider licensed, certified, or funded by the department of behavioral healthcare, developmental disabilities, and hospitals pursuant to title 40.1; or

(iii) A residential facility, group home, residential treatment facility, or program licensed, certified, or approved by the department of children, youth, and families pursuant to title 42.

(3) “Management services organization” or “MSO” means an entity that provides management, administrative, financial, or operational services to a covered care entity or provider organization for compensation.

(4) “Material change” means any merger, acquisition, consolidation, affiliation, purchase, sale, transfer of assets, change in ownership, change in control, or other transaction that results in:

(i) A change of ownership or control of a covered care entity; or

(ii) A transaction involving a significant equity investor that affects ownership, governance, or control of a covered care entity, provider organization, or MSO.

(5) “Private equity company” means any company or group of related entities that raises or manages capital and acquires, directly or indirectly, an ownership interest in a covered care entity, provider organization, or MSO for the purpose of investment or financial return, including through affiliated funds or holding companies; provided, however, that this term shall not include venture capital firms exclusively funding startups or other early-stage businesses.

(6) “Provider organization” means any corporation, partnership, limited liability company, association, or other entity that contracts with, employs, manages, or organizes one or more covered care entities.

(7) “Significant equity investor” means:

(i) Any private equity company with a direct or indirect ownership interest in a covered care entity, provider organization, or MSO; or

(ii) Any investor or group of investors that holds, directly or indirectly, ten percent (10%) or more of the equity, profits, or governance rights of a covered care entity, provider organization, or MSO. 23-17.31-3. Notice of material change.

(a) Except as provided in § 23-17.31-7, a party to a material change involving a covered care entity shall file written notice with the department of health and the department of attorney general not less than sixty (60) days prior to the effective date of the material change.

(b) The notice shall include:

(1) Identification of all parties and controlling persons or entities;

(2) A description of the transaction structure and related agreements;

(3) Post-transaction ownership, management, and governance structure; and

(4) Identification of any significant equity investor.

(c) Filing under this section shall not constitute approval unless approval is otherwise required by law. 23-17.31-4. Enhanced disclosures for significant equity investor transactions.

(a) For any material change involving a significant equity investor, the department of health, in consultation with the department of attorney general and the applicable licensing agency, may require submission of additional information including, but not limited to:

(1) Capital structure of the significant equity investor;

(2) Ownership and management structure;

(3) Sources and uses of transaction financing;

(4) Audited financial statements or equivalent financial information; and

(5) Management services, lease, or related-party agreements.

(b) The departments may require periodic post-transaction reporting for a period not to exceed five (5) years to assess impacts on service availability, cost, workforce stability, and continuity of care. 23-17.31-5. Confidentiality. Confidential commercial or financial information submitted pursuant to this chapter shall be protected from public disclosure to the extent permitted by law; provided, however, that a public summary may be issued that omits such information. 23-17.31-6. Enforcement.

(a) Failure to comply with this chapter shall be subject to a civil penalty not to exceed ten thousand dollars ($10,000) per day, enforceable by the attorney general.

(b) The department of health may promulgate rules and regulations in consultation with other affected state agencies. 23-17.31-7. Coordination with existing law.

(a) Nothing in this chapter shall be construed to modify, limit, or supersede chapter 17.14 of title 23 (“the hospital conversions act”), which shall control where applicable.

(b) Compliance with any healthcare pre-merger notification rule and regulation adopted by the department of attorney general shall satisfy the notice requirements of this chapter to the extent the same information is required.

(c) The department of health, the department of attorney general, and any other licensing agency may permit concurrent filings and shall deem compliance with duplicative statutory or regulatory requirements satisfied.

SECTION 3. This act shall take effect upon passage.