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California Governor Gavin Newsom signed Assembly Bill (AB) 1415 into law on Saturday, October 11, 2025, broadening the scope of California's healthcare market oversight efforts. Most notably, the new law expands the Office of Health Care Affordability's (OHCA) authority to review transactions involving management services organizations (MSOs) and private equity funds beginning January 1, 2026. AB 1415 implements a more limited version of the market oversight policies introduced in AB 3129, which Governor Newsom vetoed last year. SB 351, which includes corporate practice-related provisions of AB 3129, was signed on October 6, 2025, and is covered here.
AB 1415 Expands California's OHCA Transaction Review Process to Cover Private Equity and MSOs
California already has one of the country's most extensive healthcare transaction oversight regimes, spanning a particularly broad group of transactions and entities.1 AB 1415 further expands its scope by imposing notice requirements on MSOs, hedge funds, and private equity groups, and subjecting MSO transactions to OHCA review. State-level transaction laws, like California's OHCA-administered regime, are sometimes called "mini-HSR" laws in reference to their similarities to the federal Hart-Scott-Rodino Antitrust (HSR) Improvements Act.
Under California's current mini-HSR law, OHCA must be notified 90 days prior to the closing of certain material transactions involving healthcare entities (i.e., payers, providers, and integrated delivery systems). OHCA regulations limit material transactions to those (a) involving high-revenue healthcare entities (i.e., those entities with California revenue of $25 million or more) and (b) involving a material change (e.g., resulting in a transfer of 25 percent or more of the voting rights of a high-revenue healthcare entity or having a fair market value of $25 million or more). OHCA does not have authority to block transactions, but it can initiate time-consuming cost and market impact reviews, which can delay closing well past the initial 90-day notice period. Additionally, OHCA may refer transactions to the California Attorney General for a further review of anticompetitive effects. Under the current OHCA review process, notices for material transactions include a broad range of detailed information regarding the entities involved, the potential impacts of the transaction, and detailed supporting documentation such as financial and corporate governance materials.
AB 1415 broadens OHCA's oversight in three ways:
- First, it extends the notice requirement to material transactions involving MSOs, which are defined broadly and include entities providing support services, such as provider rate negotiation and revenue cycle management services. Notably, AB 1415 does not add MSOs to the definition of healthcare entities. As such, OHCA rulemaking would ultimately determine whether current revenue and materiality thresholds apply equally to MSO transactions.
- Second, it imposes notice requirements on "noticing entities," which, as defined in AB 1415, include private equity groups, hedge funds, MSOs, newly created entities whose purpose is entering into agreements or transactions with healthcare entities, and entities that own or operate providers, including providers with pending or suspended licenses. As with the extension of oversight to MSO transactions, OHCA rulemaking could extend healthcare entity filing requirements to noticing entities or establish separate ones. AB 1415 mandates that OHCA promulgate rules eliminating duplicative reporting obligations where a transaction requires notice pursuant to multiple statutory provisions.
- Third, it requires OHCA to establish data submission and other reporting requirements for MSOs to advance OHCA's purpose, which includes promoting accessible, affordable, and high-quality healthcare.
AB 1415 Reflects Newsom's Critiques of the Vetoed AB 3129
AB 1415 differs from a related bill Governor Newsom vetoed last year, AB 3129. Like AB 1415, AB 3129 created a more restrictive notice and review process for healthcare transactions involving private equity investors and hedge funds. However, AB 3129 placed reviewing authority in the hands of the California Attorney General (AG), rather than OHCA, and authorized the California AG to place conditions on deals or block them entirely without establishing clear criteria for doing so. Such authority would have created significant uncertainty for private equity groups and hedge funds. In vetoing AB 3129, Governor Newsom noted in a statement that OHCA was already serving the function AB 3129 tasked to the California AG, and therefore, OHCA was better positioned to evaluate such transactions. Instead of authorizing the California AG to block transactions involving private equity groups and hedge funds, AB 1415 takes the more modest step of creating independent reporting obligations for such investors and affording OHCA insight into transactions and operations involving MSOs, a favored vehicle for private equity groups and hedge funds. Governor Newsom's approval indicates that AB 1415 has effectively addressed his criticisms of AB 3129.
Key Takeaways
Although it does not create the same level of uncertainty for investors that AB 3129 threatened, the enactment of AB 1415 will likely have significant effects. That is particularly true for MSOs and healthcare-focused private equity groups and hedge funds, which will need to plan for more frequent regulatory filings and new reporting obligations. The passage of AB 1415, like the implementation and expansion of mini-HSR laws nationwide, reflects a state-level trend towards greater oversight, increased reporting requirements, and closer scrutiny of private equity investments in the healthcare sector. Questions still remain regarding the implementation of AB 1415, given the forthcoming rulemaking by OHCA. Private equity firms, hedge funds, and MSOs currently operating in California should consult with Goodwin lawyers to better understand the impacts on regulatory filings and transaction timelines.
Footnote
1 Goodwin Law, California: State Healthcare Transaction Notification Laws.
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