AB 1415

AB 1415 aims to broaden OHCA’s authority to review healthcare transactions, particularly with respect to transactions involving private equity groups, hedge funds, and MSOs. Previous amendments to AB 1415 established a requirement for MSOs and certain “noticing entities,” including private equity groups and hedge funds, to report a sale of assets or change in control of an MSO or “health care entity” to OHCA. Disclosures to OHCA require the submission of a substantial amount of detailed information regarding the entities and their operations.

The August 21 amendment to AB 1415 in the California State Senate includes the following material changes:

• Under previous versions of AB 1415, the definition of MSO arguably captured entities performing centralized business functions for affiliated joint ventures or wholly owned hospitals. The amended definition of MSO excludes entities that own one or more general acute care or acute psychiatric hospitals, recognizing that such entities are not traditionally thought of as MSOs.
• Prior versions of AB 1415 included an illustrative list of what may constitute management and administrative support services, namely utilization management, claims handling, customer service, and network development. The most recent amendment removes this list but retains a broad definition of MSO.
• The amended bill empowers OHCA to develop regulations that would eliminate duplicative reporting requirements for entities that would otherwise be required to submit notice under more than one provision of the bill.

SB 351

SB 351 would reinforce California’s CPOM and CPOD prohibitions via codification of existing state medical board guidance. Our prior On the Subject summarized the proposed changes to the CPOM and CPOD prohibitions in the version of SB 351 that was introduced on February 12, 2025.

The August 25 amendment to SB 351 in the California State Senate includes the following material changes:

• The definitions of “private equity group” and “hedge fund” now exclude public agencies, creating a carve-out for clinics; outpatient settings; health facilities; and ambulatory surgical centers owned, operated, managed, controlled by, or otherwise affiliated with government entities. A prior amendment to SB 351 on June 16, 2025, also created a carve-out for hospitals or health systems.
• In addition to allowing enforceable noncompete clauses in the sale of a business, the amended bill would permit the use of contractual provisions that prohibit disclosure of material nonpublic information about the private equity group or hedge fund (unless said disclosure is required by law).

Key takeaways

AB 1415

• Despite the carve-out in AB 1415 for entities that own one or more general acute care or acute psychiatric hospitals, the definition of MSO remains broad and will likely still inadvertently capture entities that lack the ability to substantially influence healthcare operations. The language in AB 1415 also does not specify what amount of ownership of a hospital would qualify an entity to be carved out of the definition of MSO.
• If signed into law in its current state, AB 1415 will likely expand OHCA’s transaction review authority for transactions closing on or after January 1, 2026. Transactions that currently would not be reviewable by OHCA may be captured by the language in the new statute. Stakeholders entering into transactions that will close after December 31, 2025, should closely review the potential new requirements and consider if they would apply to their transactions.
• Should AB 1415 be signed into law, OHCA will have the authority to adopt and promulgate regulations related to the new requirements. Interested stakeholders should closely monitor the adoption of these regulations and consider submitting comments during public comment periods.

SB 351

• Private equity groups and hedge funds should carefully evaluate existing management services arrangements with physician and dental practices to ensure these arrangements do not allow for interference with the professional judgment of physicians or dentists with respect to healthcare decisions or provide the private equity group or hedge fund with excessive control over the practice in violation of SB 351. The current version of SB 351 does permit unlicensed entities to assist or consult with a physician or dental practice regarding certain activities related to the practice so long as the licensed physician or dentist retains the ultimate responsibility for such decisions and activities.
• Private equity groups and hedge funds should review arrangements with physicians and dentists to assess the viability of existing noncompete provisions and consider incorporating confidentiality clauses that protect against the disclosure of material nonpublic information, as permitted by SB 351.