A bill sponsored by the California Medical Association (CMA) to strengthen the state’s ban on the corporate practice of medicine and counter the influence of private equity firms in health care advanced out of a Senate committee on Monday.

Over the past decade, private equity investment in health care has grown dramatically, creating the need for more oversight. The acquisition of health care service providers by private equity firms has been linked to higher health care costs for patients and detrimental impacts to quality of care.

SB 351 by Senator Christopher Cabaldon empowers the Attorney General to uphold the integrity of California’s corporate bar by taking action against private equity groups that unlawfully interfere with the physician-patient relationship.

Steve Abelowitz, M.D., offered testimony in support of SB 351 at the April 21 hearing of the Senate Business, Professions and Economic Development committee. A pediatrician who founded one of Orange County’s largest pediatric practices, Dr. Abelowitz described how the acquisition of his practice by a hedge fund led to interference that prioritized profits and compromised patient care.

“Years ago, I partnered with private equity investors in my pediatric practice, thinking that it would help me grow my practice to reach more patients and provide better care,” Dr. Abelowitz said. “While the investors agreed to not interfere with the clinical practice and just provide administrative services, they began interfering with clinical decisions in the pursuit of profits that were compromising the care of my young patients.

“Their actions included limiting access and time for patients needing ongoing care, particularly for mental health; canceling COVID vaccine clinics during the pandemic; coercing physicians to prescribe a specific brand of formula that they had financial ties to, regardless of an infant’s nutritional needs; making hiring decisions favoring less competent and less costly medical staff; and attempting to dictate which medical equipment should be used for delivering care and treatment. These actions breach the prohibition on the corporate practice of medicine and endangered my young patients’ health.”

SB 351 is part of CMA’s sponsored bill package for the 2025 legislative session. It will next be heard by the Senate Judiciary Committee.