Health facilities.

Senator Cabaldon, with coauthors Senator Blakespear and Assembly Member Patel, advances a division within the Health and Safety Code that would block private equity groups and hedge funds from influencing clinical decisionmaking in California physician and dental practices. The leaders frame the measure as a way to keep medical judgments in the hands of licensed providers and to guard against nonlicensed entities exerting control over care delivery, while maintaining existing corporate practice norms.

At its core, the division defines private equity groups and hedge funds and then prohibits involvement that would interfere with a clinician’s professional judgment or enable control over key practice operations. Prohibited actions include determining diagnostic tests, referrals, or treatment options; influencing patient load or work hours; owning or controlling patient records; hiring or firing staff based on clinical competency; setting parameters for payer contracts; shaping billing and coding decisions; and approving equipment and supplies. The measure also voids contracts or arrangements that would enable these kinds of restrictions and imposes restrictions on management or asset-sale agreements that would bar competition upon termination or suppress commentary about quality of care, with limited carveouts for certain sale-related noncompete provisions and confidential information rules.

The bill delineates how enforcement would operate: the Attorney General may seek injunctive relief and recover attorney’s fees and costs in remedying violations, with provisions treated as severable. It clarifies that the corporate form of a practice does not alter the applicability of the division, and it allows unlicensed assistance in specified decisionmaking contexts so long as the licensed clinician retains ultimate responsibility. The text notes a prohibition on creating a private right of action for individuals or practices, instead emphasizing AG-led enforcement, and it states that the division does not narrow or supersede existing corporate practice of medicine or dentistry standards.

Implementation and broader policy context hinge on regulatory interpretation and coordination with existing health care and corporate practice frameworks. The bill anticipates fiscal committee review to assess potential budgetary impacts, but does not itself specify an appropriation. Absent an explicit effective date in the published text, operative timing would depend on the enacted statute and any accompanying transition provisions. Taken together, the proposal creates a targeted oversight regime that would constrain nonclinical influence in provider decisionmaking, require contractual vigilance in physician and dental practice arrangements with investment entities, and channel enforcement through the state’s attorney general rather than via private civil actions.