ASC dealmaking has been tied to a familiar set of structures over the last decade, with private equity partners buying in alongside physician owners, a management company running the business side and, often, a sale-leaseback that turns the building into cash. In California, each of those moves can now require advance notice to the state.
The state’s Office of Health Care Affordability has finalized regulations implementing Assembly Bill 1415, and they take effect Nov. 2, according to an Oct. 21 alert from Palo Alto, Calif.-based law firm Wilson Sonsini Goodrich & Rosati. California’s Office of Administrative Law approved the rules Oct. 2.
AB 1415, effective Jan. 1, added private equity groups, hedge funds, management services organizations, certain newly created business entities and entities that own, operate or control providers to the list of “noticing entities” that must alert OHCA before certain deals close. The statute left the specific thresholds to the agency. Those thresholds are now set, and several of them line up with the way ASC transactions are commonly built.
The stakes are high for a sector that remains fragmented and attractive to investors. About 65% of the 6,468 Medicare-certified ASCs in the U.S. are independent, physician-owned freestanding facilities, according to VMG Health data. And while healthcare services deal volume slipped in the first half of 2026, the PitchBook category that includes ASCs was on pace to finish the year only 4.9% below 2025, the most resilient segment in the firm’s second-quarter report.
The most consequential number for ASC dealmakers is 10%. Under the final rules, a transaction is a material change transaction when a private equity group or hedge fund ends up holding 10% or more of the assets, equity, debt or liabilities of a healthcare entity or MSO that meets OHCA’s filing criteria. OHCA’s May draft had set the bar at 5%.
A stake below 10% can still trigger notice if it comes with an agreement granting the investor specified authority. The list includes appointing or replacing leaders or board members, veto rights, approving or vetoing debt, managing the entity through specified arrangements, charging fees, controlling the use of capital and net income, and buying healthcare real estate and leasing it back. Those are the kinds of governance and economic rights investors often negotiate when they take a minority position in a physician-led business.
“Crossing the 10 percent threshold does not, by itself, mean that an OHCA filing is required,” the firm said.
The healthcare entity on the other side of the deal must also meet OHCA’s filing criteria: generally at least $25 million in annual California-derived revenue or California assets, or at least $10 million when the counterparty meets the $25 million test or is a qualifying noticing entity. Providers that deliver services in a designated primary care health professional shortage area also qualify. The lower threshold means a single center that would not clear $25 million on its own can still be pulled in when the buyer is a large platform.
Management companies face their own set of triggers. An MSO deal requires notice when the MSO provides management and administrative services to a qualifying healthcare entity, when it provides those services to two or more providers that together generate at least $10 million in annual California-derived revenue, or when the transaction transfers control or governance of a healthcare entity. For an ASC management company adding California centers, the reportable event may be a new management agreement rather than an acquisition.
Not every management company is covered, however. The filing obligation applies to specified categories of MSOs, including certain hospital-owned MSOs and those with specified relationships to physician owners or healthcare entities.
“But the existence of a new management services agreement alone does not require notice: the MSO must also be one of the MSOs subject to the filing requirement,” the firm said.
The regulations also add a real estate trigger covering certain sales or transfers of healthcare property when the surviving healthcare entity must lease or pay rent on it afterward. Sale-leasebacks have long been a liquidity tool for ASC owners, and under the new rules, a California deal that separates a center from its building may need to go through OHCA as well.
Smaller physician groups get some relief. Covered entities exclude certain physician organizations with fewer than 25 physicians unless they qualify as high-cost outliers.
Filers also face heavier disclosure requirements. MSOs must describe the management and administrative services they provide, and private equity groups and hedge funds must report on the healthcare entities and MSOs they own, control or finance. Required materials include organizational charts and specified financial, valuation, governance, portfolio and transaction information. Submissions are generally public records unless OHCA accepts a confidentiality designation.
Timing may be the most practical change for deal teams. After OHCA deems a notice complete, the agency generally has 45 days to decide a cost and market impact review is unnecessary or 60 days to decide one should proceed, subject to tolling.
“Parties subject to the filing requirement must provide notice at least 90 days before closing, and transactions selected for a CMIR may face a significantly longer review period,” the firm said.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
