Last month, I commented on the "weird" definition of "hedge fund" in AB 3129 (Wood). On the last day of the current session, the legislature passed the bill. It is now on Governor Newsom's desk.
This bill would a "private equity group" or a "hedge fund" to provide written notice to, and obtain the written consent of, the California Attorney General before a transaction between that group or fund and any of the following:
(1) A health care facility, except for hospitals.
(2) A provider group.
(3) A provider, if the private equity group or hedge fund has been involved, directly or indirectly, in a transaction involving a health care facility, provider group, provider, or related health care services within the past seven years.
(4) Any health care facility, provider group, or provider as described in paragraph (3), that directly or indirectly controls, is controlled by, is under common control of, or is otherwise affiliated with a payor, if the private equity group or hedge fund has been involved, directly or indirectly, in a transaction involving a health care facility, provider group, or provider.
(5) A health district may refer a transfer by the district, as defined in Section 32121, of a health care facility, provider group, or provider to a private equity group or hedge fund to the Attorney General.
I quote the above to illustrate how poorly drafted the bill is. Note that number 5 in the above list of counterparties is a statement, not a category of possible counterparties.
The author claims that "When a short-term profit-driven business model is applied to our health care system, there is an incentive to raise prices, cut costs, and pay out any revenue to private equity investors". Opponents of the bill assert the "bill will result in less capital being available to fund health care services and research in California, diminished access to care for patients throughout the state, and additional failures in the health care system".
Should the bill become law, it will be a further extension of the California Attorney General's involvement in reviewing private investment and merger and acquisitions.
[View source.]
