Hospital Transactions Subject to Hart-Scott-Rodino Reporting Obligations See Dramatic Rise in Second Requests for Information

Hospital transactions, together with acquisitions and mergers, that meet Hart-Scott-Rodino (HSR) thresholds should, topic to any accessible exception, be reported to the Federal Commerce Fee (FTC) and the Antitrust Division of the Division of Justice (DOJ). Moreover, events to such a transaction should observe a compulsory 30-day ready interval earlier than finishing the transaction. The ready interval affords the federal antitrust businesses the chance to decide, earlier than the transaction is accomplished, whether or not the transaction raises any important aggressive issues.

Nearly all of reported transactions, together with hospital transactions, don’t elevate important aggressive issues, and are allowed to shut after expiration of the preliminary ready interval. A small share of reported transactions, nonetheless, are “cleared” to both the FTC or DOJ for additional investigation. If the reviewing company wants extra info to assess the aggressive affect of the transaction, it might subject a “second request” for info. Compliance with a second request usually entails, amongst different issues, in depth manufacturing of paperwork, submission of written info, and witness depositions. Events which have gone by way of the second request course of know nicely how time-consuming and costly it’s. Moreover, the issuance of a second request has the impact of resetting the ready interval to 30 days after the events have considerably complied with the second request.

Sadly, hospital transactions reported pursuant to HSR have seen a staggering improve in second requests. In accordance to the businesses’ HSR Annual Report for Fiscal Yr 2019 (overlaying the interval from October 1, 2018–September 30, 2019), solely 20% (a comparatively excessive share in contrast to different business teams) of hospital transactions cleared to one of many federal businesses for additional assessment obtained a second request. Nonetheless, in accordance to the latest annual report (HSR Annual Report for Fiscal Yr 2020 overlaying October 1, 2019–September 30, 2020) launched collectively by the federal businesses earlier this month, the proportion of hospital transactions cleared to one of many federal businesses for additional assessment (all of which have been cleared to the FTC) which have been then subjected to a second request jumped to virtually 55%.

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