Attorney General Bonta, Assembly Speaker pro Tempore Wood Introduce Legislation to Strengthen Review of Private Equity Healthcare Transactions and Abuses

AB 3129 will strengthen state prohibitions against private equity group abuses in healthcare

OAKLAND – California Attorney General Rob Bonta and Assembly Speaker pro Tempore Jim Wood (D-Healdsburg) today introduced AB 3129 authorizing the Attorney General to grant, deny, or impose conditions to a change of control or an acquisition between a private equity group or hedge fund and a healthcare facility or provider group. Private-equity ownership in the healthcare industry has more than doubled in the last decade, often leading to higher healthcare costs, poor quality, and less access to care. Private equity operation of healthcare providers has harmed patients and undermined the financial viability of providers. Aggressive profiteering by private equity owned hospitals and nursing homes cannot justify these harms.

“At the California Department of Justice, we believe that the healthcare system should serve patients. Yet, too often, private equity has served corporate profiteers by maximizing their profits at the expense of access, quality, and affordability of healthcare for Californians,” said Attorney General Rob Bonta. “Today’s legislation not only curtails harmful transactions but also stops practices that undermine the practice of medicine.”  

“A majority of studies show that health care consolidations are not lowering costs for anyone but the entities consolidating, including those acquired by private equity or hedge funds,” said Assembly Speaker pro Tempore Jim Wood. “We are often led to believe that these consolidations will save money and that it’s good for consumers, but what we are actually seeing in health care is that it reduces competition and results in higher corporate and shareholder profits. I also have real concerns about how these consolidations have the potential to reduce or limit access to certain health care services, like reproductive care.”

To safeguard fair competition and root out anticompetitive practices by dominant corporations in the healthcare industry, AB 3129 would authorize Attorney General oversight of private equity and hedge fund acquisitions of healthcare facilities and provider groups to ensure these acquisitions are in the public interest. AB 3129 will also reinforce the existing bar on the corporate practice of medicine, including the bar on the interference of private equity groups or hedge funds in the treatment of patients. Without proper enforcement predatory practices will continue to consolidate our healthcare system, driving up prices, reducing quality of care, and restricting access for patients. 

A copy of the legislation can be found here.