California Limits Private Equity Influence in Healthcare

California Governor Gavin Newsom has signed Senate Bill 351, restricting corporate investors, including private equity firms, from influencing medical decisions. The law bars financial firms from dictating patient volumes, diagnostic tests, or inserting restrictive clauses in provider contracts. It also empowers the state attorney general to impose fines on violators.

The legislation responds to evidence linking private equity ownership with higher costs, reduced services, and lower care quality. Studies show post-acquisition healthcare prices rise, staffing often declines, and patient outcomes can worsen. Private equity’s short-term profit model—buying and flipping practices in 3–7 years—has contributed to bankruptcies, hospital closures, and financial instability.

California’s law follows Oregon’s lead but stops short of banning majority ownership. Nationwide, states including Massachusetts, Maine, New Mexico, Indiana, and Washington are increasing oversight, while federal reforms remain stalled. Critics argue private equity investment remains necessary in struggling facilities, highlighting ongoing tensions in healthcare finance regulation.

12-10-2025