California state Sen. Christopher Cabaldon has introduced a bill that would bar private equity and hedge funds invested in a physician or dental practice from interfering with the professional judgment of physicians or dentists in making healthcare decisions.
The bill would prevent private equity and hedge fund firms from exercising power over coding and billing procedures for patient care, determining what diagnostic tests are appropriate for a particular condition and deciding which treatment options will be available to the patient, among other things. The bill would also prohibit noncompete and nondisparagement clauses in contracts.
This is not the California Legislature’s first attempt to corral private equity and hedge fund investment in healthcare in the state. Last year, the state Legislature passed a bill that would have regulated certain private equity and hedge fund-backed healthcare deals. That bill was vetoed by Gov. Gavin Newsom.
Unlike last year’s bill, the new bill does not require private equity or hedge fund managers to seek approval for healthcare transactions.
