Legislation co-sponsored by CDA and the California Medical Association addresses private equity interests’ interference with the clinical judgment of dentists and physicians.
If passed and signed into law, Senate Bill 351, authored by Sen. Christopher Cabaldon (D-West Sacramento), will strengthen the existing ban on the corporate practice of dentistry and medicine by barring the specific ways private equity groups and hedge funds are influencing dentists’ and physicians’ professional judgement. The bill responds to growing concerns about consolidation in California’s health care system and the increasing role of private equity interests that may not be aligned with patient health care needs.
Under existing law, licensed dental professionals and dental corporations are subject to strict professional and ethical standards to ensure patient care remains in the hands of qualified practitioners. However, existing laws do not explicitly regulate the increasing involvement of private equity and hedge funds in dental or medical practices. As a result, these entities can exert controls that allow corporate interests to influence clinical decision-making.
Bill would ensure dentists’ clinical judgement comes first
By explicitly prohibiting the indirect controls that private equity firms are using, SB 351 enforces the standards of good business governance and provides the clarity regulators and dental practices need to maintain professional integrity in dentistry and medicine. For example, the bill would prevent private equity firms from:
- Imposing patient quotas that pressure dentists to prioritize profit over necessary care.
- Implementing restrictions on the amount of time a dentist can spend with each patient, limiting their ability to provide thorough care.
- Interfering with a dentist’s ability to select the most appropriate dental supplies and equipment for patient care.
- Controlling patient treatment plans by restricting the types of procedures a dentist can offer.
- Dictating which diagnostic tests a dentist can order for a patient.
- Interfering in referral decisions.
Preventing private equity firms from dictating which diagnostic tests dentists can order ensures that clinical decisions are based solely on patient needs rather than cost-saving measures. Similarly, by barring the firms from interfering in referral decisions, dentists will be able to freely recommend specialists or additional care without financial pressure or oversight.
Bill would protect dentists from non-compete clauses
SB 351 also protects dentists from non-compete clauses and other efforts to squash dentists’ clinical judgement, like a restriction from publicly commenting on a practice’s quality of care and ethical or professional challenges or a private equity group’s revenue-increasing strategies.
The bill fully preserves the right to purchase or sell dental or other health care practices and in no way restricts private equity transactions.
“This bill is a necessary update that strengthens the ban on the corporate practice of dentistry,” said CDA President Max Martinez, DDS. “As the role of private equity in dentistry grows, our laws need to explicitly address current circumstances to protect patient needs and dentists’ autonomy as private equity interests are encroaching on it.”
SB 351 is a narrower version of a vetoed 2024 assembly bill authored by former Assemblymember Jim Wood, DDS.
The bill will have its first committee hearing in late April. CDA will keep members informed on its progress through the newsroom and weekly member newsletter, Inside California Dentistry. CDA is also sponsoring or co-sponsoring four additional bills this legislative session, including two that complement the association’s long-term strategy for dental plan reform. Read more about CDA’s current major priorities.