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Navigating Michigan-Specific Regulatory Hurdles in Healthcare M&A

Serj Mooradian and Seyed Mirabedini, Mooradian Law PLLC  /  March 27, 2025

Part of Our Ongoing Healthcare Transactions Series.

Healthcare transactions involving operations in Michigan require a close look at state-specific regulatory issues that go well beyond federal compliance. Michigan’s licensure, Medicaid, Certificate of Need (CON), and corporate practice of medicine (CPOM) rules can significantly influence deal structure, timing, and post-closing operations.

Understanding these regulatory triggers—and planning for them early—can help avoid costly delays, preserve reimbursement streams, and ensure a smooth transition of operations. This post outlines the key Michigan-specific issues to watch in any healthcare M&A deal.

Licensure: Know What Triggers a Filing with LARA

In Michigan, the Department of Licensing and Regulatory Affairs (LARA) oversees licensure for hospitals, ambulatory surgery centers, home health agencies, and more.

Why it matters:

Even modest ownership changes can require advance notice or approval to LARA. Miss the window, and you risk operating without a valid license—an expensive and reputation-damaging mistake.

What to do:

  • Start early: Some filings require written notice to LARA pre-closing.
  • Audit your licenses: Confirm all licenses are in good standing and transferable. 
  • Assign point people: Make sure someone is managing the license transition to keep patient care running smoothly post-close.

Medicaid Enrollment: Michigan’s CHOW Process Is Its Own Beast

If Medicaid is a revenue stream, don’t assume your CMS filings are enough. Michigan’s Department of Health and Human Services (MDHHS) has its own Change of Ownership (CHOW) process—and it doesn’t play second fiddle.

Why it matters:

Missing the Michigan-specific CHOW filings can cause a temporary halt in Medicaid reimbursements after closing. That gap can be painful for cash flow.

What to do:

  • File with MDHHS separately and promptly—ideally within 30 days of closing.
  • Coordinate with billing teams to ensure the new owner is recognized in the system ASAP.
  • Flag CHOW timing in your deal schedule and build in contingencies if needed.

Certificate of Need (CON): Some Expansions Can’t Move Forward Without It

Michigan maintains a robust CON program, which governs the expansion of services like imaging, surgery, and new facility development. In some cases, even a change in ownership can trigger a review.

Why it matters:

Getting a CON can take months. If your growth plan includes adding service lines or acquiring facilities, you may need one—before you can proceed.

What to do:

  • Conduct a CON analysis early: Does your deal include regulated services or major equipment purchases?
  • Build timelines accordingly: Don’t underestimate how long CON approvals can take.
  • Reference prior guidance: We’ve covered CON in more depth in our Michigan CON blog post—review it for a deeper dive into timing, common pitfalls, and strategic considerations.
  • Let us guide the process: Mooradian Law advises clients through the full CON application lifecycle—from threshold analysis and application strategy to regulator coordination and final approval.

Corporate Practice of Medicine: Structuring Physician Deals the Right Way

Michigan limits the corporate practice of medicine (CPOM), meaning only licensed professionals can own certain healthcare entities like physician practices.

Why it matters:

Structuring a deal incorrectly—such as having a non-physician entity control a medical practice—can result in unauthorized practice of medicine and contract invalidity.

What to do:

  • Use professional corporations or PLLCs registered or authorized to transact business in Michigan.
  • Ensure post-closing structures preserve professional autonomy and meet licensing rules.
  • Keep operating agreements updated to reflect CPOM compliance.

Fraud, Abuse, and Billing Compliance: State Rules Layer on Top of Federal Law

Michigan enforces its own anti-kickback statutes and false claims laws, which apply in addition to federal rules.

Why it matters:

Non-compliant billing practices or improper referral arrangements can trigger state investigations—and those liabilities can follow the buyer post-close.

What to do:

  • Include compliance due diligence in every deal.
  • Review existing contracts, billing practices, and any past settlements or audits.
  • Factor potential liabilities into deal pricing or escrow provisions.

Data Privacy & IT Integration: Michigan Has Added Protections

HIPAA is not the only law in play related to data privacy. Michigan adds additional privacy protections.

Why it matters:

M&A deals often involve migrating electronic health records and PHI. Overlooking Michigan-specific breach rules can lead to fines and reputational damage.

What to do:

  • Confirm that data migration plans comply with both HIPAA and Michigan law.
  • Review existing Business Associate Agreements and vendor contracts.
  • Involve IT early in the process to manage secure system integration.

Payor Contracts: Watch Out for Change of Control Clauses

Whether dealing with Medicaid managed care plans or commercial insurers, many payors reserve the right to approve or renegotiate contracts after a change in ownership.

Why it matters:

You may not inherit all the contracts you think you’re buying—or you may inherit them with worse terms.

What to do:

  • Scrutinize payor contracts for change-of-control provisions.
  • Notify payors in accordance with the contracts and Michigan Medicaid guidelines.
  • Negotiate assignment language during the deal to preserve reimbursement streams.

Bottom Line: Michigan Deals Require Local Insight

Michigan’s healthcare M&A landscape is filled with state-specific rules that can slow or even derail deals if you’re not prepared. From CON to CHOW to CPOM, these aren’t just technicalities—they’re deal-critical.

Our Advice:

Bring in Michigan-savvy healthcare counsel early. Doing so helps keep your deal on track, avoids compliance missteps, and ensures you’re building value—not inheriting risk.

Need Help with a Michigan Healthcare Deal?

At Mooradian Law, we help healthcare clients navigate Michigan’s regulatory maze with clarity and confidence. Whether you’re acquiring a clinic, partnering with a physician group, or expanding services, we’re here to support every step—from due diligence to post-close compliance.

Email: info@mooradian.law 

Phone: (734) 219-4890

This post is part of our ongoing Healthcare Transactions series. Stay tuned for more practical insights for entrepreneurs and operators in healthcare M&A.