Gov. Gavin Newsom has signed legislation that 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.
CDA and the California Medical Association co-sponsored the bill, SB 351 by Sen. Christopher Cabaldon (D-West Sacramento), to address the growing concerns about consolidation in California’s health care system and the increasing role of private equity interests that are not always aligned with patients’ health care needs. SB 351 takes effect on Jan. 1, 2026, and is the latest success for CDA’s legislative advocacy. It follows last week’s signing of a CDA-sponsored bill that protects dentists from the predatory use of virtual credit cards.
New law ensures dentists’ clinical judgement comes first
By explicitly prohibiting the indirect controls that private equity firms are using, the new law championed by CDA provides the clarity regulators and dental practices need to maintain professional integrity in dentistry and medicine. For example, the law will bar 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.
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.
By preventing private equity firms from dictating which diagnostic tests dentists can order, clinical decisions will be based solely on patient needs rather than cost-saving measures. Similarly, by barring the firms from interfering in referral decisions, dentists can freely recommend specialists or additional care without financial pressure or oversight.
Doctors’ concerns with private equity practices are getting more attention nationally. Modern Healthcare reports that while private equity-backed companies promise to ease physicians’ administrative workloads, “doctors say many of those pledges have fallen short.” For example, physicians have been forced to run an equipment purchase proposal through several committees before signing contracts.
“As private equity interests invest in dental practices, we need updated laws that explicitly address current circumstances to ensure that dentists’ autonomy and patients’ needs are protected,” said CDA President Max Martinez, DDS.
New law protects dentists from non-compete clauses
Under the new law, dentists are also explicitly protected from non-compete clauses and other efforts to squash their clinical judgement. For example, dentists cannot be restricted from publicly commenting on a practice’s quality of care and ethical or professional challenges or a private equity group’s revenue-increasing strategies. While noncompete clauses are already unenforceable under California law, SB 351 strengthens this protection by including it in statute.
SB 351 is a narrower version of a vetoed 2024 assembly bill authored by former Assemblymember Jim Wood, DDS. The law preserves the right to purchase or sell dental or other health care practices and does not restrict private equity transactions.
CDA will keep members informed on other legislative advocacy efforts in the weekly newsletter, Inside California Dentistry, sent every Friday morning to all members who are subscribed.