Several states have either adopted or proposed new private equity laws that could have significant impacts on mergers and acquisitions in the ASC space.
1. A bill currently awaiting final approval by California Governor Gavin Newsom would strengthen the state’s ban on the corporate practice of medicine and address the growing influence of private equity in healthcare.
The bill expands the attorney general’s powers to take action against corporate entities that interfere with the practice of medicine, including patient care decisions and coding and billing procedures.
It also restricts the ability of PE or hedge fund owners or investors to influence hiring decisions, payer contracts, internal performance reviews or medical equipment selection at physician practices and ASCs.
2. The Pennsylvania House of Representatives passed legislation June 12 that would expand the attorney general’s authority to review and potentially block healthcare mergers and acquisitions.
The bill also prohibits sale-leaseback arrangements involving private equity firms and requires healthcare organizations to disclose financial and operational details before finalizing major deals. The legislation was introduced May 13, following Los Angeles-based private equity firm Prospect Medical Holdings’ decision to close Upland, Pa.-based Crozer Health.
It also gives the public an opportunity to weigh in on any healthcare facility sale, merger, acquisition or major financial transaction that may impact patient access and public health.
3. Oregon Gov. Tina Kotek signed a bill June 9 that enacts the strictest regulatory framework in the country on private equity and corporate ownership of medical practices.
The law allows a three-year transition period for compliance and mandates that physicians maintain at least a 51% ownership stake in most practices. It also bars corporations and management service organizations from exerting decision-making control over medical groups.
Institutions such as hospitals, tribal health facilities, behavioral health facilities and crisis lines are exempt from the new rules. Supporters said that the legislation is a necessary corrective to increased “corporatization” of healthcare facilities within the state.
“We’re at an inflection point in this country when it comes to the corporatization of healthcare,” said Oregon House Majority Leader Ben Bowman in a statement May 28 following the bill’s passage in the chamber. “With the passage of this bill, every Oregonian will know that decisions in exam rooms are being made by doctors, not corporate executives.”
