Well, lo and behold, things just got a lot less complicated for hospitals and health systems seeking to acquire, or merge with, other healthcare facilities. And they have a federal judge to thank for it.
A Bit of Background
Back in 2023, the Federal Trade Commission (FTC) proposed substantive changes to the agency’s longstanding Hart-Scott-Rodino (HSR) form. The form has historically acted as a notification that companies are required to submit before executing certain large mergers and acquisitions (M&A) in the United States. It was established by the Hart-Scott-Rodino Act to provide the FTC and the U.S. Department of Justice with information about these transactions before they occur. The form requires parties to submit information about each company's business—including revenues, shareholders, investments, previous acquisitions, public filings, financial records and role in the current transaction. This way, the federal government can analyze the transactions at the outset and provide greater certainty to the parties regarding potential antitrust concerns.
The language and requirements found in the HSR form remained unchanged for decades, but in October of 2024, proposed changes to the form were finalized, with the new version going into effect beginning in February of 2025. Many chaffed under its onerous provisions, noting that the work a typical company would have to endure per filing had now tripled.
And here we are, exactly one year later.
Here Comes the Judge
On February 12 of this year, Judge Jeremy Kernodle, of the U.S. District Court for the Eastern District of Texas, ordered the rule requiring parties to submit additional information to regulators ahead of a planned merger vacated. However, his ruling allowed a seven-day delay in the implementation of his order to give the FTC time to seek an emergency appeal from the U.S. Fifth Circuit Court of Appeals in New Orleans.
According to health news aggregator, Fierce Healthcare, the U.S. Chamber of Commerce filed a legal challenge to the rule back in January 2025, alleging that the FTC had exceeded its statutory authority and that its rulemaking was arbitrary and capricious. The agency opposed those allegations and challenged the plaintiffs’ standing. Kernodle sided with the U.S. Chamber of Commerce and its co-plaintiffs across the board. He agreed that the rule’s “significant and widespread costs” outweighed the benefits. The judge went on to state in his order:
Though the FTC asserts that the Rule will detect illegal mergers and save agency resources, the FTC fails to substantiate these assertions. The Final Rule is therefore not “necessary and appropriate,” and the statute does not authorize [the FTC] to promulgate [the Final Rule].
If ultimately upheld, the decision will no doubt please the hospital industry. The American Hospital Association (AHA) had previously filed public comments during rulemaking that described the additional information requests as unnecessary and a diversion of resources from patient care.
We will see in coming days if this month’s court ruling will have a lasting positive impact on M&A activity over the long term. Interested parties are encouraged to watch for further legal developments in this case.