California Gov. Gavin Newsom has signed a bill aimed at clamping down on private equity’s influence on healthcare.
The legislation grants the California attorney general authority to take legal action against private equity firms and hedge funds that “interfere with or exert control over the healthcare decisions of doctors and dentists working for medical practices in which they invest,” according to a Sept. 12 news release from Sen. Christopher Cabaldon, the bill’s sponsor.
The bill also voids noncompete clauses that restrict a physician or dentist from practicing or speaking out about concerns if they resign or are terminated from a practice controlled by a private equity investor.
The legislation was supported by the California Medical Association. CMA President Shannon Udovic-Constant, MD, said in an Oct. 7 news release that the new law “further protects the integrity of the physician-patient relationship” against private equity’s expanding influence.”
Mr. Cabaldon said in the CMA release that private equity investment in healthcare practices has quintupled over the past decade.
“That kind of growth demands modern enforcement tools, not to restrict investment, but to make sure it doesn’t hurt patient outcomes or drive up the cost of care,” he said.
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