Assembly Bill 3129: A New Era of Oversight for Healthcare Transactions

Assembly Bill 3129, currently awaiting Governor Newsom's signature, proposes substantial changes to how private equity and hedge fund investments in healthcare are regulated.

Key Points of AB 3129:

1. Expanded Attorney General Oversight: The bill requires private equity groups and hedge funds to obtain written consent from the Attorney General before engaging in transactions with healthcare facilities (excluding hospitals), provider groups, or individual providers. This applies if the investing entity has been involved in similar transactions within the past seven years.

2. Protecting Professional Judgment: AB 3129 prohibits private equity and hedge funds from interfering with the professional judgment of physicians, psychiatrists, and dentists in making healthcare decisions. This includes restrictions on dictating patient quotas or work hours.

3.  Contractual Protections: The bill voids non-compete and non-disparagement clauses in contracts between private equity-controlled entities and healthcare practices. This aims to protect providers' ability to advocate for patient care and discuss quality concerns.

4.  Review Process: The Attorney General would have 90 days (with possible extensions) to review proposed transactions. Factors considered include potential anticompetitive effects and impacts on healthcare access.

5.  Appeals Process: The bill outlines procedures for appealing the Attorney General's decisions, including opportunities for evidentiary hearings and judicial review.

If signed into law, AB 3129 could significantly alter the landscape of private investment in healthcare practices. Proponents argue it will safeguard patient care and maintain competitive markets. However, critics worry it may discourage necessary capital investments in healthcare infrastructure and innovation.

For physicians considering partnerships with private equity or working in practices with such investments, this bill introduces new considerations. It potentially offers greater protection for clinical decision-making but may also impact the availability of certain financial resources.

As we await Governor Newsom's decision, it's essential for California's medical community to understand these proposed changes and consider how they might affect our practices and, ultimately, patient care. Stay tuned for updates on this significant piece of legislation.