PESP Statement on Governor Newsom Signing SB 351 into Law

SACRAMENTO, CA — The Private Equity Stakeholder Project (PESP) today issued the following statement from Michael Fenne, senior policy coordinator, after California Governor Gavin Newsom signed Senate Bill 351 into law:

“SB 351 takes an important step toward strengthening California’s protections against corporate control of medical and dental practices. Private equity and other corporate investors have been allowed to use loopholes in state law to influence care delivery through management service organizations and dental service organizations. Greater oversight of these arrangements is important for protecting clinical standards, preserving provider autonomy, and ensuring accountability. By reinvigorating California’s commitment to prohibiting corporate medicine, SB 351 prioritizes the health of patients and communities over short-term investor returns, and reflects a growing trend among states working to curb the risks of private equity.”

SB 351, authored by State Senator Christopher Cabaldon, strengthens California’s ban on corporate interference in healthcare by giving the state new powers to enforce existing prohibitions on the corporate practice of medicine. The law prevents private equity and hedge fund investors from influencing medical decisions or billing practices at physician or dental offices they back and allows regulators to pursue violators.