Navigating California’s Proposed Health Care Transaction Legislation: Assembly Bill 3129

California Assembly Bill 3129, introduced in February 2024, has the potential to significantly impact health care transactions in the state, particularly those involving private equity firms and hedge funds. The bill would require these parties to obtain prior written consent from the California Attorney General before acquiring or changing control of certain health care businesses and assets.

The proposed legislation aims to curb consolidation in the health care industry allegedly driven by private equity firms and hedge funds. While previous bills attempting to regulate health care consolidation have not passed, AB 3129 has a narrower scope and may have a better chance of approval.

If enacted, the law would apply to transactions entered into on or after January 1, 2025. Private equity groups and hedge funds acquiring control of health care facilities or provider groups in California would be required to file for AG approval. The bill also includes exemptions for financially unviable assets and could impact contracting structures like the Friendly PC-MSO Model.

Parties considering health care transactions in California should be aware of the potential implications of AB 3129 and factor them into their planning. The fate of the bill will become clearer by early July, and if passed, it could lead to increased scrutiny of health care transactions in the state.