Nursing Home Change of Ownership: New York & Florida Regulatory Requirements

A Change of Ownership (CHOW) occurs whenever there is a transfer of operational control, a sale of assets, a transfer of a controlling interest in an operating entity, or a change in the composition of a partnership that operates a licensed nursing home. In New York, CHOWs are governed by Public Health Law Article 28 and require approval from both the Department of Health (DOH) and the Public Health and Health Planning Council (PHHPC). In Florida, the Agency for Health Care Administration (AHCA) oversees all nursing home CHOW transactions. Both states impose strict pre-approval and notification requirements, and operating a facility without the required approvals can result in severe penalties including license revocation and exclusion from Medicaid and Medicare programs.

The centerpiece of any New York nursing home CHOW application is the preparation of Schedules 2A and 2B. Schedule 2A discloses all direct and indirect principals — individuals or entities holding a 10% or greater ownership or control interest in the proposed operator. Schedule 2B extends this disclosure to related parties, management companies, and affiliated entities. Every disclosed principal must submit a character and competence package, including audited financial statements, a detailed biography, a signed authorization form, and a criminal background check. The DOH reviews each principal's prior regulatory history across all affiliated facilities, including inspection outcomes, enforcement actions, and prior CHOW approvals or denials. Incomplete or inaccurate Schedule submissions are the single most common cause of CHOW application delays.

Florida nursing home operators must notify AHCA of a pending CHOW at least 60 days before the anticipated effective date. The AHCA application requires the proposed operator to demonstrate financial solvency through audited financial statements, proof of liability and professional liability insurance meeting Florida minimums, and a completed background screening for all controlling interests under the Florida Medicaid and Public Assistance Fraud program. AHCA will conduct a survey of the facility before issuing the new license to the incoming operator. If outstanding deficiencies or enforcement actions are pending against the facility, AHCA may impose conditions on or delay the new license, which can significantly affect transaction closing timelines.

Both New York and Florida apply a "character and competence" or "fitness" standard when evaluating CHOW applicants. Regulators examine the applicant's entire portfolio of affiliated facilities, assessing CMS Five-Star ratings, health inspection results, staffing scores, prior enforcement actions, outstanding civil monetary penalties, and any history of receiverships or license surrenders. In New York, the 40% automatic disqualification rule applies here: if affiliated facilities collectively fall below a 40% Medicaid occupancy threshold across the prior 36 months, the application faces automatic disqualification absent a waiver. Proactive portfolio analysis before filing is essential to identify and address any potential disqualifiers.

The most frequent CHOW pitfalls include: (1) failure to identify all indirect principals triggering disclosure obligations; (2) submission of unaudited or outdated financial statements; (3) inadequate documentation of the operator's prior regulatory history across affiliated facilities; (4) missing or improperly executed authorization forms; and (5) failure to account for pending Medicaid audit settlements or outstanding survey deficiencies that must be disclosed. A missed disclosure — even inadvertent — can be treated as an act of fraud or misrepresentation, resulting in automatic denial and potential referral for further regulatory action. Engaging experienced regulatory counsel prior to executing a purchase agreement is the most effective way to avoid these pitfalls.

CHOW applications in New York typically require 6–18 months from submission to PHHPC approval, depending on application complexity, the volume of disclosed principals, and the current DOH review backlog. Florida AHCA CHOW reviews generally run 90–180 days from a complete submission. Given these timelines, purchase agreements for nursing home acquisitions must include regulatory approval as a closing condition with realistic outside dates and extension provisions. Buyers should also include representations and warranties regarding the accuracy of all Schedule disclosures, and sellers should indemnify for any pre-closing regulatory liabilities that surface post-approval. Meridian Regulatory coordinates directly with transaction counsel to ensure regulatory milestones align with deal timelines.