Assemblymember Mia Bonta Sends Bill to Increase State Oversight on Private Equity Healthcare Spending to the Governor

AB 1415 expands the Office of Health Care Affordability's (OHCA) existing oversight as Californians grapple with rising healthcare costs and private equity purchases of hospitals and other health facilities.

• Daniel McGreevy
• Communications Coordinator
• (916) 319-2589
• [email protected]

SACRAMENTO - Monday, AB 1415, authored by Assemblymember Mia Bonta (D-Oakland), Chair of the Assembly Health Committee, was sent to the Governor's desk after passing its final vote on the Assembly floor.

If signed into law, this bill would strengthen the ability of the Office of Health Care Affordability (OHCA) to keep patient's healthcare costs down by requiring that private equity groups, hedge funds, and Management Services Organizations (MSOs) notify OHCA when they engage in significant transactions, such as mergers or acquisitions with health care entities such as hospitals, physician organizations, skilled nursing facilities, or other MSOs.

"AB 1415 ensures that Californians have a watchdog when it comes to the billions of dollars of private equity transactions in California's healthcare system," said Assemblymember Mia Bonta. "This bill is a crucial step to close the gaps in the Office of Health Care Affordability's oversight abilities at a time when our constituents are demanding that we take action to protect access to affordable and high-quality care."

The Office of Health Care Affordability was established in 2022 to address the health care affordability crisis facing Californians as health care costs continuously outpace inflation and eat into working families' budgets. OHCA collects and analyzes data on health care spending, promotes strategies for improving affordability, quality, and equity of health care; enforces cost-growth benchmarks for the state; and reviews health care transactions for their effect on competition, prices, access, quality, and equity.

AB 1415 follows the Governor's highly watched veto of AB 3129 last year, which also sought to address private equity spending in healthcare. In his veto of AB 3129, Governor Newsom directed that OHCA should be the state entity reviewing proposed healthcare transactions as would be implemented in AB 1415.

AB 1415 has received support from organized labor, nurses, and health advocates to control healthcare costs and safeguard patients' care amid rising consolidation:

• Private equity acquisitions of health care providers in California totaled $4.31 billion between 2019 and 2023, accounting for one-third of the state's health care deals.
• The share of community hospitals owned by a larger health entity increased from 53% in 2004 to 68% in 2022.
• Doctors working in a hospital or practice partially owned by another hospital or healthcare system went from 29% in 2012 to 41% in 2022.

Research shows that as market consolidation rises, so do prices, and hospital mergers have been growing steadily for the past decade. Mergers often lead to reductions or closures of services as profits are increasingly prioritized over the needs of the community members reliant on these health systems.

"We all are feeling the rise in our health care prices, and one big reason is that powerful investment and private equity firms are quietly buying up hospitals, clinics, and doctors' offices, often cutting corners to boost profits. Yet the state doesn't have all the information needed to determine the impact of these mergers for California health care consumers," said Katie Van Deynze, Senior Policy Advocate with Health Access California, the statewide health care consumer advocacy coalition. "AB 1415 can help by giving our state's Office of Health Care Affordability the authority to collect information from these firms when they buy a provider in our communities. We hope Governor Newsom signs this bill so we can have the full picture when health care mergers have the potential to harm patients or workers and drive up costs."

If signed into law, AB 1415 would serve as landmark legislation as Illinois, Texas, and even the United States Congress work to tackle this pervasive issue.

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Assemblymember Mia Bontarepresents California's 18^th Assembly District encompassing the East Bay including Oakland, Alameda, and Emeryville. She also chairs the Assembly Health Committee.

Courtesy photos can be found HERE.