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California seeks legislation to slow healthcare mergers, protect competition

California Attorney General Xavier Becerra is seeking authority to slow healthcare mergers, arguing that consolidation typically accelerates amid crises like the COVID-19 pandemic, according to The Los Angeles Times. 

Mr. Becerra is asking state lawmakers for legislation requiring healthcare companies to provide written notice of a merger or acquisition and granting him the ability to deny deals that prevent care access, increase costs or reduce care quality.

Currently, Mr. Becerra can regulate the nonprofit healthcare industry in California. The new bill would allow him to regulate the for-profit healthcare industry as well. He wants a bill to cover instances when a private equity firm or hedge fund plans to acquire a practice or hospital.

Mr. Becerra said that the added authority would help protect competition in the state, especially as many healthcare organizations feel the financial pinch from the COVID-19 pandemic. 

"We find that in these times of crisis, economic and health crisis, that the smaller healthcare players and stakeholders are oftentimes most at risk of being swallowed up by the big fish," Mr. Becerra said. "The biggest concern I have is the legislation will be killed by the industry [and] we'll end up seeing overconsolidation because decent practices that got on the edge could not swim with sharks."

The California Hospital Association opposes the bill. Alex Hawthorne, a lobbyist representing the association, said that hospitals are already stretched thin because of the pandemic and meddling in routine agreements would add to the pressure they feel. 

More articles on healthcare industry transactions: 
Novant offers $5B+ bid for North Carolina hospital
Hospital M&A update: 9 recent deals
West Virginia system joins Allegheny Health's network, GPO

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