Major regulatory changes, consolidation projected for the Southeast

Healthcare mergers and acquisitions are expected to rebound in the Southeast in 2023, and the Carolinas stand to be a premiere arena for that activity, JDSupra reported Jan. 11.

An early entry in that trend, Charlotte, N.C.-based Atrium Health and Advocate Aurora Health, formerly headquartered dually in Milwaukee and Downers Grove, Ill., made waves Dec. 2 when they closed a $27 billion merger, creating a 67-hospital system named Advocate Health and headquartered in Charlotte. The combined system is the fifth-largest nonprofit health system in the U.S.

Five things to know about JDSupra's 2023 projections for the region:

1. Major deals

In Georgia, Augusta University Health System, the Medical College of Georgia at Augusta University, and Marietta-based Wellstar Health System are creating a statewide health system.

2. Independent physician practice ownership 

Transaction activity is expected to trend back toward 2021 highs with divestitures and physician practice acquisitions pushing transaction values higher.

3. Certificate of Need regulations

South Carolina is considering the first substantive changes to its CON regulations in more than a decade. Proposed amendments would raise the threshold for capital expenditures that require a CON to more than $5 million and the equipment acquisitions threshold to more than $2 million. Both will be indexed to account for inflation. If the state's legislature neither votes to approve nor reject the proposed amendments within 120 days after receipt, the amendments will take effect by default.

North Carolina's state treasurer filed an amicus brief in August 2022 in a case by physicians challenging the legality of the state's CON law. The brief requested that the state Supreme Court examine its effects on blocking others from entering the market

4. State-level restructuring

South Carolina Senate Bill No. 2 aims to divide the state's Department of Health and Environmental Control into two separate state agencies, the Department of Behavioral and Public Health and the Department of Environmental Services. The bill's supporters hope the split will increase overall efficiency within the departments.

5. Growth of life sciences industry

South Carolina leads the region in life science employment gains with a 7.7 percent increase versus to a 4.6 percent increase across the Southeast as a whole. The life sciences industry in South Carolina generated a $25.7 billion annual economic impact as of February 2022. On December 2, Nephron Pharmaceuticals opened a $100 million nitrile glove manufacturing facility that will bring an estimated 250 new jobs to the state.

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