A proposed bill in California aims to increase oversight of investments in healthcare by requiring private equity (PE) firms and hedge funds to notify the attorney general proactively to obtain approval of certain transactions, according to Kaiser Health News. The bill also reinforces existing state laws that prohibit nonphysicians from directly employing doctors or managing their activities. The proposed policy comes as PE dealings in healthcare are facing added scrutiny nationwide with growing concerns that their involvement might lead to increased prices, lower-quality care, and reduced access. However, advocates argue that PE investments can also provide necessary capital and strategic direction for companies in need. Currently, nonprofit hospital transactions are already reviewed by the state’s attorney general, but this bill would expand that oversight to include for-profit clinics, physician groups, nursing homes, testing labs, outpatient facilities, and other providers. If enacted, the attorney general would assess the impact of ownership changes on care quality, access, pricing, and competition.
A pretty penny: PE investors have spent $1 trillion on healthcare acquisitions in the past 10 years with physician practices being the most attractive targets. Like California, other states such as Connecticut, Minnesota, and Massachusetts, have proposed their own legislation to gain transparency into PE transactions. Whether PE is friend or foe depends on the players involved. Some firms have provided structure and financing leading to recent successes in California, including a fertility clinic and a pediatric dental practice that serves Medi-Cal, according to the news report.
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