In this episode of “Counsel That Cares,” Arjan Peters from Capstone moderates a conversation with his colleague Grace Totman, Holland & Knight healthcare attorney John Saran and Association for Responsible Healthcare Investment CEO Regan Parker about the evolving landscape of private equity investments in healthcare. They explore recent federal and state regulatory developments, including transaction reporting laws, antitrust scrutiny by the Federal Trade Commission (FTC) and notable battleground states pushing new legislation. The episode also highlights the impact of public perception shaped by high-profile healthcare closures, importance of transparent investment narratives and strategic approaches for investors to proactively engage with regulators and policymakers. Speakers emphasize that despite regulatory challenges, private equity plays a crucial role in sustaining and innovating the healthcare industry, encouraging stakeholders to document positive outcomes and advocate for balanced, informed policies that enable continued investment and growth.

Podcast Transcript

Arjan Peters: My name is Arjan Peters. I’m a director of healthcare business development here at Capstone. We are a policy analysis and regulatory due diligence firm, working for investors and corporations. On the line with me, we have Capstone’s co-head of healthcare, Grace Totman, along with John Saran, a partner at Holland & Knight, and Regan Parker, CEO of the Association for Responsible Healthcare Investment, to discuss the role of private equity in healthcare. So we have an exciting agenda here today, planning to discuss the current landscape of both the federal and state level of private investments in the healthcare industry. With that, I’d love to start with John, maybe your perspective from the legal view, maybe open it up to how we got to where we are today. Obviously, it’s been a pretty noisy last 12, 18, 24 months in both federal and state level. So we’ll maybe allow you to set the stage for us in terms of where we are today.

John Saran: Yeah, thanks. And as you said, John Saran, Healthcare Transactions partner, I sit in the Chicago office. Holland & Knight is one of the largest healthcare practices in the country. I’ve been a part of the discussion on these laws, I would say, since it came onto the national scene with the large transactions going through the Oregon process. I was involved with some of those in the last few years through the present. And, as you mentioned, right, the role of private equity in healthcare has been at the forefront of review by both the federal and state government on the last few years, and it kind of goes back to the prior administration in terms of a focus on that manifested in various different ways.

First, there were requests for information by various agencies – the DOJ, the FTC, HHS – seeking the information about roll-ups, about private equities involvement in healthcare. You saw updated regulations and guidance from CMS and other agencies that covered ownership. Obviously, we’re all in healthcare, we’re used to ownership disclosure, but there was some refinement and focus on private equity for hospice, home health and other types of providers. You know, there also has been some recent FTC and antitrust cases that were bought against PE-backed platforms and with a focus on roll-up strategy and, you know, both litigation and consent decrees and whatnot. I think we’re all aware of those. Merger guidelines came out focusing on roll-ups, you know, transactions over a five-year period and sort of the effects of, you know, several small transactions that normally would fall under the HSR standard and sort of how their collective concentration, how that would affect the market. And so on the federal side, right, it’s all an effort to really study the effects of healthcare consolidation on the federal side. You also had some bipartisan, you know, set of committee reports that also looked at some case studies. And as you can imagine, out there in the field, there’s been press and other case studies on sort of the, you know, one end of the spectrum. And I think it gave opportunities for stakeholders to really step up and tell the other side of the story. And that’s obviously where opportunities for Regan and her organization to step in there, but that’s where it’s been, what’s been happening on the federal side.

And then on the state side, the state AGs and other health agencies would typically find out about major transactions happening in their states after the fact. Yes, states have historically had transaction reporting statutes for nonprofits or for hospitals or certain licensed providers like pharmacies or ambulatory surgery centers. There was still a large subset of the market, that large deals were happening, and it wasn’t on their radar. And so some states like Massachusetts and Connecticut actually were some of the original states that had more transaction reporting statutes on the books, but they were more limited to just their regions. It didn’t – they weren’t capturing large national transactions that required sort of these types of laws to be discussed in every sort of deal discussion or investment opportunity discussion. Then, you know, if you go to the right after COVID in the early ’20s, Washington passed a law, Oregon passed their transaction review statute, started to pick up large national transactions, including private equity-backed platforms. And I was involved with some of the first few in Oregon, and it dawned on me like, look, this is going to be a thing that will affect all deals in the next few years, especially if these laws proliferate across the country. And they did. We saw the other East Coast states, we saw the Midwest, especially, past these statutes. And there’s been reporting. Luckily, there hasn’t been states that have blocked transactions, but there’s been a few that have stalled out or a few that have had consent requirements or conditions.

But I would say 2024 was really the pivotal year. We had several states that tried to pass new laws or update their current laws to, you know, increase notice requirements or put a consent requirement, adequate practice. And nearly all of those states failed in 2024, except for Indiana. Indiana was the only state that was able to pass a reporting statute with an emphasis on private equity transactions. The one that made national headlines was obviously the Governor Newsom’s veto of AB 3149, which would have put a consent requirement on PE transactions and also added corporate practice of medicine restrictions. So looking at the end of September, you know, right around the time of the veto, you have, things started to point towards the end for these statutes. However, the election happened, the perceived change in the enforcement outlook of the FTC happened, I think states started to realize and feel the pressures from the local constituents about what was happening in their state with stakeholders in their states. And then that leads us to 2025. I know we will talk about that next, but I just would like Regan to kind of weigh in on what she’s saying up to this point.

Regan Parker: Yeah, thanks, John. Nice to be here again. My name is Regan Parker, and I’m the CEO of the Association for Responsible Healthcare Investment. And we were formed a couple months ago, we just launched, but we were formed mostly to take a look at these issues from both the legislative perspective, but also a broader policy and advocacy perspective. And when I think about how we got here, you know, a lot of this is public perception. There have been some very dramatic bad outcomes as a result of some investment strategies or some bankruptcies that I’m sure you all have been aware of. And when that happens, it can change the perception. Healthcare impacts everybody. It impacts communities. And it can be seen as an issue that can have dramatic impacts on people’s everyday lives. And so when there are perceived problems, rightfully so, states and federal governments and communities want to jump in and try and right the perceived wrongs.

So what we’ve seen happen is, you know, a more… public perception of private capital investments and private equity investments in healthcare being seen as problematic or challenging or a model that puts profits over patients. And so part of the reason why we formed was to try to change that narrative and to try and make sure that the good that’s being done in healthcare is being talked about. I know as an industry, private equity typically doesn’t want to raise their hand up and talk about what they’re working on for fear of risk or fear of enforcement. But unfortunately, we’re just not in a place anymore where that’s possible. The narrative is being written, and you’re seeing, again, as John mentioned, state by state, they’re going after private equity and private capital investments in healthcare, and they’re seeking to regulate it. And so if the industry as a whole doesn’t start to have those conversations, laws could potentially get through that have significant impacts on these businesses and on your investments and also in the local communities. So part of what’s important in terms of where we are today and how we got here is understanding the current landscape, understanding the challenges in it, and then figuring out different strategies for trying to better educate lawmakers and the public in terms of all of the good that these investments have in healthcare.

Arjan Peters: Grace, any comments from your perspective, just given the vantage point that you have discussing with our hedge fund clients, our private equity clients and obviously our corporates as well. What’s top of mind for you based off of what John and Regan just said?

Grace Topman: Yeah, absolutely. And just to review, Grace Topman, as Arjun mentioned, I’m the co-leader and director of healthcare here at Capstone. John, Regan, thank you for being here. Obviously, your perspectives are so important on this topic and could not agree more with everything that you both just said. I think in terms of how I think about how we got here, one of the things that I often find myself, you know, reminding myself of – and especially our private equity and hedge fund investor clients of – is that even though 2024 was really this inflection point for investor-targeted bills on the state level and kind of investor-focused investigations, we’ve seen similar types of laws and regulations for decades that were much more, had a much more narrow focus, right, that were focused on hospital ownership or specific provider types. And so yes, you know, 2024 to John’s point was really that inflection point of private investor focus, notice and review laws, but we have kind of seen this coming over the past decade or two, just in this rise in the attention on the space. And Regan, to your point, I could not agree more that this is a perception issue. You’ve seen some really high-profile hospital closures, some really high-profile, you know, bankruptcies that I think have started to lead some, especially on the state level, some of these legislatures to try and crack down on this without really understanding the ramification. So completely agree with everything you both just said about how we got here. But just wanted to throw in that point about, you know, while the last couple of years have been particularly active, this has been a little bit more of a slow burn than I think people appreciate. And there is so much in the history when you go back into some of the more liberal states in particular in the past. Now I know we’re going to get into that, you know, that liberal state dynamic is shifting a bit and maybe no longer true on a go-forward basis. But as you think back historically, that’s what really sticks in my mind.

Arjan Peters: Now, John, maybe swinging back to you, I’d be curious on your perspectives before we dive into the state level, giving us the current state of play at the federal level as we think about the FTC and the antitrust vantage point today. How are your clients going about viewing the current FTC outlook, the current antitrust outlook, and maybe how it might be shifting over the next couple of years? What’s top of mind for you and your client base as you think about the federal-level view of private equity ownership?

John Saran: Yeah, thanks. And I’ll talk about sort of the new reporting process first, and then talk about enforcement perception. You know, one thing that Regan said is, right, it’s no one, you know, folks are reluctant to share, right, their investment thesis or their, that narrative, that positive narrative. Well, the new HSR rules and the new HSR form that went into effect on February 10, now has all kinds of expanded narratives where you have to provide that investment thesis. A part of that needs to be the effects of your investment on the healthcare market, right? And it can’t be, “Well we’re doing this because we have to get bigger so we can help negotiate better rates and pairs.” Like, that can’t be the answer. It needs to be something along the lines of “We’re providing investment for this provider in such that we will help improve patient care, we’ll help improve access to care, we will help connectivity for EHRs, we will help the efficiencies that will help actually lower costs for patients.” And those narratives can’t be empty talking points that some lawyer like myself puts together two weeks before you make the filing, it actually now needs to be meaningful and supported by documentation. It just needs to be ingrained in the overall direction of the organization.

The other part of it, given the expanded requirements, it’s going to take longer to put that initial filing together. You want to start earlier in the planning process, get antitrust counsel involved earlier in the planning process. FTC said it takes about 121 hours to prepare versus the past about 68. The other thing that’s important is that there’s a five-year look back. So, you know, a lot of folks only tend to think about antitrust or HSR process when they buy a platform or sell a platform. But if now with this emphasis on looking at smaller transactions for the past five years over $10 million, that picks up most add-on deals. And so, that same level of hygiene and scrutiny and the process that you might have for that larger, for your exit, now needs to be applied to your add-ons because it’ll all get bundled and put out as part of this filing and could be under review by the FTC. The other big change for me being on the deal side is that typically in the past documents that go before boards or very senior management would be the document packages that’d be submitted as part of the HSR filing, but now it also includes a supervisory deal lead. So your MDs that are, you know, leading the deal team, whatever they see now could be part of this as well. In context, though, I mean the FTC is only, you know, if you look at the rate of challenge of transactions, is still, you know, roughly around one percent. So in my mind, what has changed here is you have a much more comprehensive filing and just something that requires, I think, more planning and ingraining that investment thesis in the organization and can’t just be something that is concocted. It has to be shown over a period of time.

In terms of the enforcement climate, which is the other piece that everyone’s thinking about, there’s obviously been a shift in terms of the approach between the two administrations, and I think that was – and you can just compare from a recent consent decree, the statements made by the outgoing FTC Chairman Lina Khan and the incoming FTC Chairman Andrew Ferguson, as to how they think about private equity. The outgoing chairman essentially pinned the target on private equity and said it was responsible for various things. And whereas the current chairman, I think, dispelled the fear that I think a lot of our clients have, is, you know, look, there’s a bullseye on private equity and we should expect scrutiny just because we’re doing a deal in healthcare. That’s not the message that he was delivering. The message that was delivering was “We don’t care if you’re private equity or whoever else in healthcare. We are looking at, we are looking for your traditional anti-competitive conduct, basic anti-trust violations. It doesn’t matter who you are, we’re not single-handedly focusing on private equity.” So I think that’s important to keep in mind. I know we’ve gotten a lot of calls about that since the administration change. There has been a continued litigation that may have been on hold, has been continued. There’s been some new challenges involving TEBAC platforms, which is consistent with his statements and that prior consent decree. Again, not a focus on private equity in particular, but a focus on anti-competitive conduct and sort of that basic antitrust principles.

Arjan Peters: Now, Regan, how are your members thinking about this, both at the federal and state level, this new FTC administration, and just thinking about the positioning, as we’ll talk about a couple of times here today, how are how are your members thinking about positioning this properly? We all see the headlines in the Wall Street Journal, and our clients get questions from their IC about how to position this properly. What are you hearing on the ground floor from your clients that they’re doing to help combat this?

Regan Parker: Yeah, I mean, I think a few things. I think one, there are no assumptions anymore, no safe assumptions about a political environment, whether it’s one administration or another, you can’t assume that any one is going to be more favorable than the other. And part of that is because you’re seeing scrutiny come from both sides of the aisle. So this is now, you know, less a partisan issue and more sort of a broad political issue. And so given that you have to be prepared to be able to have conversations about the good that you’re doing as a company or as a firm, regardless of what the administration is, regardless of which state you’re in. You know, the industry has to change how it engages on these issues. You cannot continue to ignore it or hope you don’t get caught in the crosshairs. This industry as a whole does really, really good work. They do important work. These investments are critical. Healthcare in our country is not something that can be sustained without private investment. And so what we have to do and what members of our organization are doing is focusing on how do we talk about the good that we’re doing? How do we about the impact that we are having on communities and on states and on disadvantaged communities? We have a set of core principles that our member companies and investment firms have to adhere to, and that’s to differentiate ourselves from the bad actors. So I think a lot of this is acknowledging that there have been bad actors, there have been bad practices, and then being able to differentiate ourselves from that and then focus on what are the case studies? What’s the research that’s being done? How do you talk about your company or your investment companies in a way that immediately puts you in the position of being a good actor in the space? What a lot of people fail to recognize, in my work as a lawyer and government relations professional for my entire career, is that often when issues come up, even if it’s litigation, even it’s an audit, even if it’s legislation, it’s often a perception issue first. And so if you can talk about the good that you’re doing as a company and as a PE firm, if you talk about how your investments have changed communities and the good that they’re doing and the ways that you are giving back, it immediately changes the conversation to one of finding solutions versus just being attacked. And so I always advise that you try to be a company that’s doing good first or be an investment firm that’s doing good first. And I believe that most companies and most firms in the space are doing that. They’re just not talking about it. And so now is the time to really make a commitment and look at your portfolio, look at your companies and mine those for case studies. Have things that you can point to. Our organization is helping to do some of that work as well by pulling together case studies about certain investments. And we’re also making an investment in some research to really be able to prove out with some facts and data about the good that this work does. And again, we can’t survive in this country without these investments. And so how do we make sure that we’ve got hard facts and data and stories that we can tell the industry as a whole and legislators and policymakers so that when they do try to regulate, they’re coming at it from a more informed perspective.

Arjan Peters: Regan, maybe just to double-click there before we pivot to battleground states, what would you say is the best way for your members and for private equity sponsors to go about figuring out that data, engaging in those case studies to better market and better lobby on their behalf? Is there, you know, a gold standard in your world, is there a good case study that you can refer to maybe now or down the road in which you’ve seen folks be able to put together something that really advocates for the good of private equity? Because to your point, I feel like a lot of it’s this marketing issue or the client basis of our respective firms are having to fight against loud lobbies in D.C. and congressmen and senators that are just seeing the one or two bad headlines and kind of painting the entire industry as bad actors. How are you guys thinking about pulling these case studies together and finding that data as you mentioned?

Regan Parker: Yeah, so again, we’re a new organization, but one of the things we’re focused on right now is putting together case studies from member companies. So if a firm is a member, we can pull together, go do some research and have some conversations with your investment companies and put together a white paper, you know, a one- or two-page white paper that’s just a case study that says, you know, we made this investment in this company and the impact on their community was this, but it’s really looking towards your investment and figuring out which ones have really had an impact on a community. How have you changed the system? Did you impact access to care? Are you working in traditionally underserved communities? Do you impact women or, you know, different, typically disadvantaged groups? So how can you start to mine your portfolio companies for that information and for that data? Tons of companies out there have lots of data about these issues. They just haven’t pulled it together and put it in a format that you can use. As an organization, we can certainly help do that. We can help you put those together, and then when we go and lobby on the Till or in certain states when there’s an issue, we can pull from those and pull you in or pull your member companies in to have those conversations. To be successful in making the change in the tide of this conversation, it’s going to be really important to have those one-on-one conversations. Having a grassroots effort, you know, pulling together patients that have been impacted by your care. At the end of the day, politicians and policymakers are still people, they’re still humans, and they respond well to story. And so if you have a compelling story that you can tell to a policymaker, it often opens the door for a more thoughtful conversation. And so our organization is really focused on pulling together as much of that as we can so that we are prepared to help regulators understand why this industry should be valued and how we can set up a framework of regulation that still allows it to thrive.

Arjan Peters: John, earlier you mentioned California, and thankfully, Newsom’s Saturday veto last fall on AB 3129, but would love to take your brain on some of these battleground states, whether it’s Texas or Oregon or California. Would welcome your perspectives on what the boots on the ground at your firm are hearing and seeing today. It would be great to maybe get a sense in terms of how you guys are seeing the current state of play.

John Saran: So I, you know, in sort of my history, right, I kind of brought us right up to the end of the year, right. In the closing days of ’24, really early ’25, Massachusetts legislature finally agreed amongst themselves which direction to take the therapy-focused bill. And that was signed into law in early January. It was one of the first wins for the states in 2025, and those first maybe six weeks of the year, we saw dozens and dozens and dozens of bills proposed across 15 states. It was a wild time for those of us that are tracking and are very much a part of discussions with lobbyists’ associations. And what we saw was, you know, new states come onto the map. We saw states, existing states that already had frameworks wanting to increase them. And the big takeaway for me was the bipartisan approach. So states like Indiana, Texas, North Carolina, South Carolina, they’re all of a sudden now are on the map with proposed bills. Wisconsin, Iowa, Minnesota, you know, red states, purple states, you know, New Mexico. It was all across the board. And these bills, as I was, you know, one of the things I mentioned last year, the change in the administration and sort of leaving it to the states, I think that is a part of the reason why you saw just a flurry of state activity, and they all broke down into it wasn’t just focused on private equity or transaction reporting. Now even broadened to transaction reporting, ownership disclosures, separate from transactions, just almost creating healthcare companies into many public companies with reporting financial statements and org charts and all those types of things that, you know, a lot of our clients don’t like to provide. Corporate practice of medicine was now woven into the mix. So it’s this interesting intersection of traditional antitrust with state healthcare laws, which is why you have someone like me who’s not traditionally antitrust part of this conversation because of that. And then a focus on restrictive covenants, which, there was a big wave of focus by the FTC on restrictive covenants, and then that was the transfer to the states.

And as we sit here today, I call it like a scoreboard, it’s about three to five. So three states have successfully passed bills this year, five states, there’s been, you know, efforts have failed or stalled. I talked about Massachusetts as being one of the successful states. You also had New Mexico that updated their hospital transaction statute with a PE and management services organization focus. And then you had Washington, actually just passed a generic transaction reporting statute that basically says if you file HSR and you meet certain requirements, you have to send a copy of that HSR to the Washington AG. So it’s sort of a unique version of these bills where it doesn’t have all the bells and whistles but at the end of the day it still puts more transactions on the state AG’s radar. And then if you look to states that failed, there were more aggressive bills in Washington, including for practice of medicine, that failed. There were bills in Vermont, Minnesota, Colorado, Illinois, my home state, trying to add a consent requirement for PE transactions and healthcare that did not go forward. So that’s the current scoreboard, and we’ve got a few weeks here.

A lot of the legislative sessions are starting to wrap up, and you’re starting to see a lot more flurry. So on the battleground states, Texas has been just given, right, this all started on the East Coast and the West Coast, and so no one expected it to happen in Texas. Well, it did. There were three bills that were proposed in early 2025. Shocked a lot of folks, especially given, you know, some of the folks behind the bills were Republicans and additional Democrats. And what you saw from the industry was substantial participation from both sides of the discussion. The bills actually in the last week or so came up for committee. A lot of stakeholders provided written testimony, stakeholders provided in-person testimony. The disclosure requirements, whether it be for transactions or sort of just general ownership, faced heavy resistance. However, just in doing this over the last few years, these bills never really just go away. And so, folks are thinking that potentially a market study might be what ultimately gets passed. Unless the bills ultimately just stall out entirely. But Texas is a main battleground state, as you can imagine, because if the largest conservative-leaning state in the country puts in something like this, then what’s to stop the rest of the country at that point? So it’s certainly one of the focus of many of our clients today. You also have Indiana, which passed a statute, as I said, last year, and it was just a reporting statute at the time. The incoming governor, now current governor, wanted to update that statute to basically require all private equity transactions in healthcare to go through AG review. And so then this year there was a bill that basically said that, that went through the legislature. However, as it made it through the various houses, folks from the industry stood up and talked about how those types of restrictions and requirements could affect investment in their platforms, right? And if you look at certain industries, like, let’s just use dental as an example, if you do something to affect private equity investment in dental, where else are they going to get that money from, right? It’s not like medical where you have health systems, insurance, platforms and private equity. It’s like, dental has one access point. And you saw a reaction from legislature, you know, to that compelling testimony, both from medical providers and dental providers. And that PE consent requirement actually was written out. And now it’s just limited to increased ownership disclosures and greater power for the AG to review market concentration. And as of the last few days, that Indiana bill is actually being pushed quickly through the legislature. And, you know, given the governor wanted additional framework, financial framework, I would imagine that he will sign it. The other big battleground is Oregon, they’ve had a transaction review statute that picked up most national transactions for some time and they’ve reviewed dozens of transactions to date, but there’s been a secondary fight on codifying and putting in place a more aggressive corporate practice of medicine statute. It only focuses on the medical side. It doesn’t affect dental or other types of providers. But if passed, would directly affect platforms in Oregon. I mean, it was crafted to focus on things like common ownership of doctors in the MSO and the practice. It focuses on restricted transfer, the direct to stock transfer agreement, continuity agreements that a lot of folks rely on to ensure control or continued operations of the practices. So if that does go forward, that could affect structures, it could affect the ability to get financing. I mean, there are ways around it and provide that comfort. I think the broader risk there is, if something like that were to pass Oregon, and then it gets picked up by other states. You know, Vermont tried to do something very similar. It ultimately stalled out. But I think that worry would be one of other larger states pick up something like that. I mean, New York has generally been like an outlier with this type of thing. And you know most structures are, accommodate New York versus other states. But I think where the concern would be is if multiple states put in place this type of law, which then would require substantial changes to structures. There are other battleground states, but, yeah, that we’ll see, you know, kind of work through the next few weeks. But in my mind, and others might have thoughts, but Texas, Indiana, Oregon are the three that I’m focused on.

Grace Topman: John, Regan mentions the driver of just a perception issue, but when we talk about efforts arising in Texas, Indiana, states where they haven’t existed in the past, where are they coming from? Is it state lawmakers who are kind of seeing what Oregon did, seeing what almost happened in California, and deciding to champion this issue? Is it provider groups? Is it association? Where are these efforts kind of being born from in most of the battleground states that we’re seeing today?

John Saran: I mean, it’s all the above. In Indiana, it was the governor, right? So that’s unique. But in Texas, I think it’s a combination of what is happening locally influenced by outside groups and looking at other states, what’s happening in other states. You start to see similarities between some of the bills, common language, common provisions. But I think it’s just more so just the one thing we said earlier, right? It’s just that bipartisan focus now on, you know, the effects of healthcare consolidation, when there’s a bad result in a state. Some big health system shuts down or something, that affects constituents regardless of political affiliation, right? And those folks are not going to be happy, and those folks will reach out to their representatives. They’ll reach out their attorney general, right, and put that pressure to do something. And then the question is, what do you do? And if legislators just kind of copy and paste from another state, the conditions are different. What made it work in Massachusetts or Connecticut or Oregon, how can you tell if it’ll work in Texas? Drastically different markets, different stakeholders, and what you don’t want to do is put something in place before even understanding the need, which is why I think a lot of stakeholders in Texas are pushing for a market study to study, what, are there actually issues in Texas? And then we can decide what legislative solution, if any, is required.

Regan Parker: It’s really fascinating to watch this because, I’ve seen this in other industries too, which is, you know, as John mentioned, the states will sort of copycat one another or they’ll pile on. And so you’ll get a regulator and a legislator in one state see what’s happening in another, and they’ll take model language or similar language and slap it on another bill. And again, with the intention of trying to help, but often without having enough information to really understand the impacts in a state. But this is a very common practice that happens among the states, which is they’ve got a tremendous amount of power and they will copycat one another. So one of the things that we’re working towards is to put together our own proposed model frameworks of legislation so that if states and legislators want to try to regulate on some of these pieces, what are the things that our members can be for and can support, because a lot of this has just been reactionary. So we would like to get to a place where we can engage in those conversations proactively and advance our own sort of framework legislation that is consistent across states. Again, for, you know, bigger firms and bigger companies, having to comply with different state regulations can be incredibly time-consuming and costly and challenging, and so getting a little bit of commonality among a handful of states, I think, would really help the industry.

Grace Topman: Just to echo that copy and paste or copycat dynamic even more, I mean, we see it all the time. I’m remembering back to one of the more intense examples that I’ve witnessed in which we were tracking some women’s health-related laws that have the exact same spelling error in 13 states because they’ve been copy and pasted so specifically. It’s interesting to think about how kind of that dynamic combined with what John was mentioning about just how these efforts are coming from so many different places. The governor in Indiana, state lawmakers and other states, you know, associations and others, and then that copycat dynamic. I’m sure it makes your job Regan a little bit more challenging as you think about things kind of coming from all different angles and all sorts of champions in the space.

Regan Parker: It does, but it also, it’s what makes it interesting, but there is a solution, and I think that’s what a lot of firms and companies need to understand, is that if you engage in these conversations and start to really educate people about the good work that’s being done, the conversation will change and the dynamics will change. It’s just been this echo chamber of the bad outcomes and the bad stories and the bad headlines. And so it’s really time to change that narrative, and it will change. And again, at the end of the day, these are all regulators and legislators who have their community’s best interest at heart most of the time and are looking for positive outcomes, and so if you can offer those and offer them something to talk about that’s the good that’s being done, it really can change the conversation.

John Saran: Yeah, I just want to say one thing that’s literally a, like a recent example as of yesterday. Given these laws and this dynamic, both in the federal, but I think very important for the state right now, given where we are in legislative calendars, everything is changing almost on a daily basis, but people have to make decisions, right. Should we go to market? Should we wait a year? Should we sign up this deal to buy or whatever. Should we go into the state? I literally had a banker come to me recently and say, this platform we’re looking at, and another banker told them that they had no chance because of a pending bill. And I’m like, which bill is it? I looked it up and said, wait, this bill has been dead for two to three months. Why would you kill this bill or kill this transaction? And that sort of mentality, I think, is one that I really want to try to dispel here, regardless of whether something’s put in place or not. There’s still a way to navigate through it. There’s still way to get done, get deals done. I mean, Oregon has had their consent process for a few years now, and it had several transactions reviewed. There’s only been like one, I think, that didn’t actually go through. So I want to dispel those fears of, oh, there’s a pending bill or there’s current transaction review process, we should be scared and we don’t want to invest. I think that mentality, it should be more along the lines of like, sit down with that expert, take a breath, and find a way to navigate it.

Arjan Peters: Given that we only have a couple of minutes left, I’d like to welcome any questions that the audience listening may have.

Grace Topman: I have a couple that came in over email, several of which are kind of in the same vein of where should we be looking next, what states are you worried about?

John Saran: So those three I mentioned are three that, you know, we’re actively looking at. There’s also Connecticut, is one where they’re trying to decide sort of what direction to take. I mean, obviously, Connecticut has had some of the most headlines out there. Colorado was one that actually got pretty far in the process, but the legislature pulled the bill back after discussions with the AG and industry and wanted to take some time, but that one could come back. And then, you know, I think there’s also one in New York as well. Connecticut, New York, Oregon, Colorado, Texas, Indiana, and obviously California. I didn’t mention it before. I mean, part of the veto bill from last year was recycled and put back into the mix the practice portions of the vetoed bill from last year. It is making its way through California’s legislature. I think they’re going to face the same question as to whether it’s redundant. The governor declared the last bill to be redundant. They literally took verbatim half of it and refiled it. So I think you’re going to face that same challenge there. Even if that is passed, it essentially just codifies existing law that’s been in effect for several years. So most of my clients that are California-based, PE-backed platforms, they already have the parameters in place to comply with that law to the extent it even comes into effect.

Arjan Peters: I wonder what maybe one piece of advice you might have or one action item you might have for investors listening. Obviously, you kind of have to talk about the services you guys offer in terms of building out those white papers and case studies. But mechanically, as folks listening go back to the desk, what would you recommend they do as they’re trying to go and ensure they’re championing and advocating on behalf of the private equity industries involved in healthcare.

Regan Parker: Yeah I think it’s good, you know, to look at your investments, look at your investment thesis, your strategies, your portfolio companies and figure out what are the existential risks. That’s where I always like to advise, starting with what would take down your investments, what would take down any of your companies and start to work backwards from there. Understanding what your risk profile is, I think, is really, really important, and then figuring out where do you go from there. I think taking a look at all of your companies and seeing, again, putting together those case studies and starting to advocate for that. Put out the case studies, do some media, try and do some press, talk about it on social media, but really getting that story out there publicly is what’s going to help most. And then again, obviously partnering with experts who can look at the risk landscape and help you figure out how to navigate it, I think it’s going to do wonders for the industry. This issue is not going away, but again, I don’t think this is something that needs to shut down dealmaking or create paralysis. These are solvable issues. Again, this industry contributes a tremendous amount to the healthcare crisis in this country. There are some really amazing technologies and innovative solutions and access to care. All of this good work is being done, and so again, it’s just about how do we talk about that and how do make sure that you have people next to you who are helping you guide your way through when and if the risks do present themselves.

Arjan Peters: And John, maybe shifting back, obviously wearing a different hat, how would you be thinking about, you know, for the folks going back to the desk after this? What’s top of mind if you’re in their shoes?

John Saran: I mean, it sort of goes back to what I was saying earlier. Just take a breath, right? It’s not the end of the world. There are ways to kind of cut through this, focus on the planning, get antitrust counsel involved earlier, start building your investment thesis earlier. I think the more you invest upfront, the easier it’ll go down the line. If in the remote chance things are scrutinized, then you will have a good story to tell. And it will be a story that is genuine and meaningful, not, you know, concocted by lawyers.

Arjan Peters: And Grace, maybe rounding us out here, you see a dozen-plus clients a week. How would you want our clients to go back to the desk and think about these issues that we talked about today and go about their day?

Grace Topman: I’m going to sound like a broken record with John and Regan, but I think it’s very similar to what they’ve said. I mean, from our conversations with sponsors, they’ve fallen into one of two buckets. The first is, this is really scary. I don’t want to touch any of this with a 10-foot pole. And we have had sponsors tell us that we’re not going to look in California anymore, we don’t want to buy providers anymore. And then the second bucket has been where I think people should be, which is, this is noise that could create a really exciting opportunity, whether that’s from a valuation standpoint or just pure competition in a process. And I think it sounds like John, Regan and I are all in agreement that that should really be the lens that investors are viewing this in, is there’s a lot of noise. One, there are so many resources out there to help investors kind of navigate all of this, the three of us on the phone being some of those resources. And two, when we see volatility and complexity, that also comes with opportunity. So I would really just foot stomp everything that John and Regan said. And again, obviously their perspectives are so invaluable here. And I think there’s some pretty clear action items that listeners can come away from with this conversation.

Arjan Peters: John, Regan, Grace, thank you all for your time today. Thanks to the audience listening to the conversation, and let’s make some deals happen this year. Reach out to the folks on the line here to pick their brains and let us hopefully have a busy next three quarters here, but I appreciate you all making time for us today and we look forward to continuing the dialogue here.