Lawmakers in California are hoping that keeping private firms out of their health care market will help down the cost of health care there and maintain the quality.
California Assembly Bill 3129 would let the state attorney general review many efforts by private equity groups and hedge funds to acquire health care facilities and health care provider groups.
The attorney general would get the ability to block some deals involving nonphysician providers with annual revenue over $4 million or other health care providers with annual revenue from $4 million to $10 million.
The bill would exclude deals between an investor group and a nonphysician and some other types of deals.
What it means: Curbs on health care sector deals involving private equity might help keep clients' lists of health care providers stable.
But the curbs could hurt any business owner clients who were hoping to sell their companies to investor-backed buyers.
Passage of new health care roll-up curbs could also be a sign that state and federal lawmakers will use antitrust laws to influence all kinds of corporate dealmaking in ways that could have a long list of good, bad and hard-to-grade effects.
In the real estate market, for example, many members of the public and some policymakers have called for new limits on investors' ability to buy single-family homes.
The backdrop: California has long put tight limits on corporate ownership of health care organizations.
It allows for partnerships, nonprofit groups and health maintenance organizations to practice medicine, but it generally forbids for-profit organizations to practice medicine or other health care professions. California strongly prefers for the licensed professional to be responsible for how the professional practices medicine.
In other states, investors have bought up many related types of health care practices, such as physician group practices and dental group practices.
The Federal Trade Commission and the Justice Department last month suffered a district court-level defeat in Texas over an effort to fight a private equity firm that has been buying anesthesiology practices, but the agencies have vowed to continue to fight efforts by private equity firms to roll up competing health care providers.
The FTC and Justice Department started an antitrust investigation of private equity firm involvement in health care delivery May 23.
