California Adds Second Law in One Week Targeting Healthcare Investments

On October 11, 2025, California Democratic Gov. Gavin Newsom signed AB 1415 into law, which amends the California’s state healthcare transaction review law (the Health Care Quality and Affordability Act) to increase the state’s oversight authority over certain types of healthcare transactions. The bill specifically targets healthcare transactions entered into by private equity groups, hedge funds, and management services organizations (MSOs). The law increases the number of transactions that will need to be reported to the California Office of Health Care Affordability (OHCA). A more burdensome version of this bill was proposed last year, but Gov. Newsom vetoed it, as discussed in Updates here and here. AB 1415 follows just a week after Gov. Newsom signed SB 351, which formalized corporate practice of medicine restrictions for private equity and hedge funds, as discussed in our Update here. The changes to the law under AB 1415 and SB 351 will be effective January 1, 2026.

The new law now creates a category of reporting entities called “noticing entities,” defined to include (1) hedge funds, (2) private equity funds, (3) MSOs, (4) new business entities “created for the purpose of entering into agreements or transactions with a health care entity,” and (5) entities that own, operate, or control a healthcare provider, regardless of whether the provider is currently providing services or has an active license. These “noticing entities” are required to provide notice of certain transactions to OHCA, although in more limited circumstances than is already required for “healthcare entities.” Specifically, while “healthcare entities” are required to report if they are party to any transaction meeting the applicable requirements, reporting for noticing entities is required only for transactions between the noticing entity and a healthcare entity or MSO — or an entity that owns or controls the healthcare entity or MSO — that that do either of the following:

(i) sell, transfer, lease, exchange, option, encumber, convey, or otherwise dispose of a material amount of the healthcare entity’s or MSO’s assets to one or more entities

(ii) transfer control, responsibility, or governance of a material amount of the assets or operations of the healthcare entity or MSO to one or more entities

The law also imposes broader reporting requirements on MSOs, which are required to report such transactions (see (i) and (ii) above) between the MSO and any entity. OHCA is directed to develop guidance for MSOs to report this information and to prevent duplicate reporting.

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The law is scheduled to take effect on January 1, 2026. Private equity sponsors, hedge funds, and MSO platforms should closely review their current or proposed transactions in the healthcare space for compliance with these new requirements.

If you are interested in learning more about how AB 1415 and other recently enacted laws may affect your business, please contact the Sidley lawyer with whom you usually work or one of our team members listed below.