What is the story about?
What's Happening?
California's legislature has passed two bills, AB 1415 and SB 351, aimed at increasing regulatory scrutiny on private equity and hedge fund investments in health care. AB 1415 expands the oversight of the Office of Health Care Affordability (OHCA) to include more health care transactions, while SB 351 reinforces restrictions on non-physician investors influencing medical decisions. These bills are now awaiting Governor Newsom's approval, which could significantly impact investment practices in the state's health care sector.
Why It's Important?
The proposed legislation could reshape the landscape of health care investments in California by imposing stricter oversight and limiting investor control over medical practices. This may deter private equity and hedge funds from entering the market, potentially affecting the availability of capital for health care providers. The bills aim to protect the integrity of medical decision-making and ensure compliance with corporate practice of medicine laws, which could lead to more ethical investment practices.
What's Next?
Governor Newsom has until October 12, 2025, to sign or veto the bills. If enacted, health care operators and investors will need to reassess their agreements and structures to comply with the new regulations. The industry may see a shift in investment strategies, with increased focus on aligning with regulatory requirements. Stakeholders should monitor developments closely to understand the potential impacts on future transactions.
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