California Refines Reporting Requirements for Private Equity and Healthcare MSO Transactions

California's Department of Health Care Access and Information Office of Health Care Affordability (OHCA) on September 11, 2026, published a notice of an intent to file Proposed Emergency Cost and Market Impact Review (CMIR) regulations (Proposed Regulations) to implement Assembly Bill (AB) 1415.¹ The Proposed Regulations clarify the filing process created on January 1, 2026, for private equity sponsors and management service organizations (MSOs) seeking to consummate transactions in California. The Proposed Regulations are expected to go into effect in early October 2026 at the conclusion of the Office of Administrative Law's emergency review and public comment process. Though it is possible the Proposed Regulations could change, they are expected to be finalized without significant changes. Any private equity sponsor or MSO considering a transaction in the fourth quarter of 2026 or 2027 should study the Proposed Regulations to understand how they could affect deal timelines, costs and transactional processes.²

AB 1415 requires private equity groups, hedge funds, MSOs, newly created business entities, and entities that own, operate or control a healthcare provider (collectively, Noticing Entities)³ to file notice 90 days in advance of a transaction's closing if certain thresholds, detailed below, are met. However, the statute it amended delegated authority for determining the process for filings to OHCA. At the time of its passing, it was unknown whether the process for Noticing Entities would be the same or different than that for healthcare entities. To help clear the confusion, OHCA issued website guidance to assist stakeholders in making filings. The Proposed Regulations now provide those necessary clarifications and will likely capture most private equity and MSO transactions.

Definitions and Thresholds Matter for Noticing Entities

Though healthcare entities are subject to annual revenue or asset thresholds in California before being required to file with OHCA, the Proposed Regulations do not include any such thresholds for Noticing Entities, requiring careful analysis of the definitions and thresholds.

Private Equity: The definition of "Private Equity Group" in the Proposed Regulations cross-references that in AB 1415 and means "an investor or group of investors who primarily engage in the raising or returning of capital and who invest, develop, dispose of, or purchase any equity interest in assets, either as a parent company or through another entity the investor or investors completely or partially own or control." The definition carves out persons or entities that contribute or promise to contribute funds to a private equity group but who otherwise do not participate in management of the group or the group's assets or in any change of control of the private equity group or its assets. Though this definition has not been tested, it likely captures the main financial sponsor, whereas limited partner and other passive investors are not.

Hedge Funds: The definition of "Hedge Fund" in the Proposed Regulations similarly cross-references AB 1415 and means "a pool of funds managed by investors for the purpose of earning a return on those funds, regardless of the strategies used to manage the funds. Hedge funds include, but are not limited to, a pool of funds managed or controlled by private limited partnerships or other types of private corporate or partnership formations." Similar to private equity groups, persons or entities that contribute or promise to contribute funds to the hedge fund but otherwise do not participate in management of the fund or the fund's assets or in any change of control of the hedge fund or the fund's assets are exempted from the definition. Likewise, entities that solely provide or manage debt financing secured in whole or in part by the healthcare facility's assets, such as banks, commercial real estate lenders and bond underwriters, are also carved out from the definition. This carve-out should cover most standard financing arrangements for platform acquisitions and working capital loans. However, the minority investment thresholds may dissuade traditional lenders from taking equity incentives in transactions.

A transaction would require a filing to OHCA if it involves a private equity group or hedge fund and results in:

• the private equity group or hedge fund holding 10 percent or more of the assets, equity, debt or liabilities of a healthcare entity (including a group of co-investors in the aggregate) meeting the threshold requirements⁴ or an MSO meeting the requirements detailed below, or
• the acquisition of assets, equity, debts or liabilities of a healthcare entity meeting the threshold requirements or MSO with an agreement whereby the private equity group or hedge fund has authority to do any of the following: 1) appoint or replace leadership or governing body members, 2) veto decisions made by the organization, 3) alter operations by expanding or reducing healthcare services or changing arrangements with MSOs or payers, 4) purchase the real property of a healthcare entity where services are provided and lease the property back to the healthcare entity, 5) cause, require, approve or veto the incurrence of indebtedness, 6) manage or operate the healthcare entity or MSO, 7) charge fees to the healthcare entity or MSO, or 8) spend the capital and net income of the entity, which may include approving, directing, restricting or controlling budgets, capital expenditures, distributions or the use of net income or tax reserves

These filing thresholds for private equity transactions are significantly lower than OHCA's requirements for healthcare entities and those found in other states' healthcare transaction review laws. Stakeholders should pay attention as it would capture most private equity platform acquisitions/sales and many minority investments.

MSOs: The definition of an MSO cross-references AB 1415, which defines an MSO as "an entity that provides management and administrative support services⁵ for a provider in support of the delivery of healthcare services, excluding the direct provision of health services." A provider is defined as an enumerated list of entities that deliver or furnish healthcare services, including health facilities, clinics and specialty clinics, ambulatory surgical centers, clinical laboratories, imaging facilities and physician organizations, which include only medical group practices of 25 or more physicians.⁶ The definition excludes entities owning any healthcare facilities.

To meet the filing threshold, an MSO must also meet one of four following requirements: 1) be owned by a hospital and have one or more physician organizations as clients or affiliates, 2) employ the physician-owner of, or otherwise contract with, one or more physician organizations, 3) share directors, officers, investors or other natural persons with the ability to exercise control with respect to a healthcare entity or 4) be affiliated with at least two of the following: a payer, two or more physician organizations, or a hospital.

A transaction would require a filing to OHCA if it involves an MSO and results in:

• an MSO providing management and administrative support services for a healthcare entity with at least $25 million in annual revenue or assets
• an MSO providing management and administrative support services for two or more providers that collectively generate $10 million in annual California-derived revenue, or
• a transfer of control, responsibility or governance, in whole or in part,⁷ of a healthcare entity

These definitions are expansive and designed to capture MSO-professional corporation (PC) platforms with non-healthcare entity investors. The Proposed Regulation's definitions and notice requirements will provide the state significantly more information about the way these platforms operate in California. It is also important to note that the 10-year lookback for transactions also applies to MSO transactions.

On the sidelines, as noted in Holland & Knight alerts published on May 21, 2026, and June 30, 2026, the California Attorney General (AG) recently brought two actions against MSO-PC platforms to enforce the state's corporate practice of medicine (CPOM) and dentistry prohibitions. Concurrently, the industry awaits the appellate court's consideration of the California AG's recent amicus brief in a case assessing the enforceability of continuity agreements. These developments will not impact deal timelines but continue to serve as considerations for deal structures regarding operational and clinical oversight over time.

REITs: There is not a definition that captures "real estate investment trusts" (REITs), but there is general catchall language that captures transactions that result in the sale or transfer of real estate on which healthcare services are provided, whether or not the provider is currently operating or providing services or has a pending or suspended license to an entity other than acquiring entity or its direct parent entity and the surviving entity will be required to lease or pay rent for the real estate.

New Filing Content

The Proposed Regulations now ensure the filing content requirements apply to all submitters⁸ – subjecting Noticing Entities to the extensive requirements that mirror Hart-Scott-Rodino Antitrust Improvements Act (HSR) filings required by the Federal Trade Commission (FTC). Accordingly, a filing could add substantial time, cost and transparency to stakeholders looking to transact in California. The new requirements are particularly onerous for private equity and/or MSO transactions that may not meet HSR thresholds but now surpass the thresholds in AB 1415 and the Proposed Regulations.

The Proposed Regulations add the following new information and document disclosure requirements:

• identification of the owner of real property involved in the transaction where services are performed
• for MSOs, the services offered, services provided to any healthcare entity involved in the transaction, geographic service areas and names of all healthcare entities to which the MSOs provide services
• for private equity sponsors or hedge funds, 1) names of healthcare entities and MSOs directly or indirectly owned, controlled or financed by the participating asset managers and funds they manage, and 2) documentation sufficient to show the ratio of debt to enterprise value or ratio to debt to equity, source of any debt and post-recapitalization debt ratio for any acquired healthcare entity or MSO
• names of affiliates, parents and subsidiaries of the submitter and detailed organizational charts that show all entities or persons with 5 percent or more ownership
• names of all of the members of the submitter's governing body such as the board of directors, managing partners or limited liability company managers
• identification by a healthcare entity or Noticing Entity of any affiliations with an MSO
• reporting of any equity or quality of care ratings or assessments conferred by governmental or private agencies based on standard measures for purposes of accreditation, certification or recognition
• anticipated cost savings, quality investments, price reductions and service expansions as a result of the transaction
• description of post-transaction changes to 1) ownership information down to 5 percent or more, 2) voting rights, decision-making authority, management and compliance structures, and 3) real estate, regardless of whether the healthcare entity is operating or not, including sales, transfers to affiliates, encumbrances or updates to landlord-tenant agreements
• copies of letters of intent (unless superseded by an agreement) and any lease-back or property agreements
• independent valuation reports by third parties (fair market value opinions, fair value opinions, solvency opinions and other strategic value opinions), internal management-prepared valuation analyses, previous financial and/or tax reporting valuations performed over the last three years, valuation analyses for board or special committee presentations, and community benefit reports
• copies of documents or presentations shared with investors or the governing body of the healthcare entity or MSO that support the narrative responses
• documentation showing executive compensation (options, compensation, closing bonuses or other financial incentives) for those that exercise authority over the healthcare entity subject to the transaction

These new requirements, particularly regarding all affiliate and upper-tier ownership information and governance for all entities with 5 percent or more ownership, likely capture sensitive information that a Noticing Entity has historically not had to make public and may prefer not to do so now. Accordingly, OHCA's Proposed Regulations adopt a new confidentiality process.

Seeking Confidentiality Protections Is Important as Filings Are Public

Information and documents provided by submitters are considered public documents and require the submitters to designate information as confidential with an explanation as to why that is the case. Similar to Oregon's process, California submitters need to provide both redacted and unredacted copies of the documents. If a confidentiality request is denied, a submitter is permitted to withdraw any information or documentation. The good news is that versions of stock purchase agreements, compensation documents, contract rates, transaction valuations and unredacted resumes marked confidential are deemed confidential and nonpublic by OHCA.

What Is the Real Timeline?

Importantly for all transactions, though notice is required 90 days preclosing, OHCA will notify the parties within 45 days of the filing being deemed complete (OHCA will deem a notice complete when all required information has been submitted) if it determines that it will not conduct a CMIR. If OHCA determines that a CMIR will be conducted, it will notify the submitter within 60 days. These periods are tolled, however, if OHCA requests and is awaiting any further or clarifying information from either the parties to a transaction or a third party if necessary to complete its review.

As noted in a previous Holland & Knight alert, according to OHCA, the review process could take up to 250 days if a CMIR is required. However, this timing is not expected in the vast majority of transactions. Of the 51 transaction notices that have been filed with OHCA to date, only two have undergone a CMIR, and one had a post-transaction monitoring advisory letter issued.

How Will the Proposed Regulations Affect Private Equity and MSO Deals in California?

The impact of the Proposed Regulations will depend on the transaction structure. For example:

1. Platform Acquisition with an HSR Filing Required. If the transaction already triggers an HSR filing, many of the same materials required for HSR could be repurposed for the California filing, thereby significantly lowering the administrative burden. Also, because the HSR filing is confidential under federal law, Noticing Entities should be able to obtain confidentiality for such filing's contents under California law. Moreover, the submitters could hear back from both the FTC and OHCA around the same time whether a second request or a CMIR has been triggered.
2. Platform Acquisition Without HSR Filing. Platform-style transactions involving healthcare entities and MSOs that fall below the HSR threshold could still be captured by the Proposed Regulations. The administrative costs and time required to put together the newly required OHCA filings will be notable and should be accounted for by all stakeholders in the transaction documents. Moreover, the waiting period for the notice to be processed by OHCA will also require a staggered sign and close transaction.
3. Minority Investment by Private Equity. Given the 10 percent investment threshold, certain minority investments and hybrid finance transactions with equity components could now require a filing to OHCA.
4. MSO Add-Ons. Regardless of the structure of an add-on transaction (e.g., a merger of MSOs, nonclinical asset purchase, 100 percent asset purchase), all transactions must be carefully scrutinized to determine whether any party meets OHCA's definitions and thresholds, particularly given the 10-year lookback period for related transactions.

Public Health Emergency Exception

A new prong for expedited review now captures an urgent situation not of the submitter's making (including a public health emergency, natural disaster or legal mandate) when the public interest would be best served by an expedited review.

What Is Not Covered from AB 1415

AB 1415 authorized OHCA to collect data and information directly from MSOs operating in California. However, OHCA did not mention data collection in these Proposed Regulations. Future rulemaking may address that requirement. OHCA also did not provide a process to mitigate redundant filings if transactions triggered multiple review requirements.

AB 1415 also included a requirement for MSOs to provide OHCA written notice of any agreement or transaction with any other entity to sell or otherwise dispose of a material amount of its assets to one or more entities or transfer control or governance of a material amount of its assets or operations to one or more entities. On its face, the requirement appeared to create a new reporting pathway for MSOs for transactions that do not meet the thresholds in the Proposed Regulations. It is unclear whether future implementing regulations could create such a pathway with an abbreviated filing requirement or whether OHCA intentionally omitted that requirement as a third reporting obligation because it was otherwise addressed by the Proposed Regulations.

Navigating the Uncharted Waters Ahead

Though the Proposed Regulations may place a new administrative burden on private equity and MSO stakeholders seeking to transact in California, transactions will still close. OHCA has not historically utilized its review to stop or stifle transactions. Even in Oregon, where the state has a consent requirement for private equity transactions, deals are being approved. OHCA and the California AG are distinct and separate offices. It would be presumptive to assume that because 2026 has seen enforcement actions by the California AG against MSOs for alleged marketing and CPOM violations that private equity and MSO transactions will face similar heightened levels of scrutiny by OHCA.⁹

As the regulatory landscape continues to change, stakeholders should consider engaging experienced healthcare counsel to help them navigate the Proposed Regulations and prepare OHCA submissions early in the transaction process. All parties to transactions need to best position themselves to navigate OHCA's review process and the potential for public scrutiny.

Holland & Knight can guide interested stakeholders as they navigate the uncharted waters of this new regulatory framework in California. For questions, please contact the authors.

Notes

¹ As of 2 p.m. ET on September 22, 2026, OHCA has not made the filing with Office of Administrative Law.

² Though not applicable to the Proposed Regulations, all parties engaging in healthcare transactions in California must also remember that Senate Bill 25, requiring some HSR filings to also be submitted to the California AG, goes into effect on January 1, 2027. There may be some transactions requiring both a submission to the California AG and an OHCA filing.

³ Though not expressly called out in the Proposed Regulations as Noticing Entities, stakeholders with transactions involving REITs should take note of the new real estate-specific requirements. Moreover, one of the newly added prongs for the imposition of a CMIR includes whether a REIT is involved in the transaction.

⁴ These thresholds are as follows:

• healthcare entities that are a party to or subject of the transaction, with annual revenue of at least $25 million or that own or control California assets of at least $25 million
• healthcare entities with annual revenue of at least $10 million or that own or control California assets of at last $10 million that are a party to or subject of a transaction with any 1) healthcare entity with an annual revenue of at least $25 million or that own or control California assets of at least $25 million, 2) entity that owns or controls a healthcare entity with an annual revenue of at least $25 million or that owns or controls California assets of at least $25 million, or 3) new noticing entity described in California Health & Safety Code § 97435(b)(4)-(7)
• providers of fully integrated delivery systems that are party to or the subject of the transaction and provide healthcare services in a designated primary care health professional shortage area in California, or
• an MSO meeting any of the thresholds in California Health & Safety Code § 97435(b), detailed below

⁵ Including provider rate negotiation and revenue cycle management services.

⁶ California Health & Safety Code § 127500.2(t), (r). Dental practices and other healthcare practices are notably excluded from this definition.

⁷ A transaction directly or indirectly transfers control, responsibility or governance, in whole or in part, of a material amount of the assets or operations of a healthcare entity to one or more entities if 1) the transaction would result in the transfer of 25 percent or more of the voting power of the members of the governing body of a healthcare entity, such as by adding one or more members, substituting one or more members, or through any other type of arrangement, written or oral, or 2) the transaction would vest voting rights significant enough to constitute a change in control such as supermajority rights, veto rights and similar provisions even if ownership shares or representation on a governing body are less than 25 percent. California Health & Safety Code § 97435(e).

⁸ This position is consistent with the FAQs – prior to this clarification, there was a question as to whether Noticing Entities could provide just a simple notice, such as a press release, given the lower filing thresholds in lieu of the longer form notice.

⁹ The FTC has generally moved away from scrutinizing a particular stakeholder in the healthcare industry and generally looks for anti-competitive conduct from any stakeholder.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.