| Update Applicable to: | Effective Date |
| All Employers and Organizations in Health Care and Dental Practices | January 1, 2026 |
What happened?
On October 6, 2025, Governor Gavin Newsom approved the Senate Bill (SB) 351 to address concerns about non-clinical interference in patient care decisions by financial entities.
Overview:
This new regulation aims to preserve the independence of licensed health professionals by limiting the influence of private equity groups and hedge funds in clinical decision-making.
Prohibited Interference:
- Financial entities cannot dictate or influence diagnostic tests, treatment plan, patient referrals, or scheduling.
- They are barred from controlling medical records, hiring/firing clinical staff based on competency, or making billing/coding decisions.
Contracts:
- Any contract granting such control to non-clinical entities is void and unenforceable.
Scope:
- Applies to physician and dental practices, regardless of corporate structure.
- Defines “private equity group” and “hedge fund” for clarity.
- Exemptions: Hospitals, public agencies, and traditional lenders.
Source References
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