Physician Practices NAICS 621111

Nov 3, 2025 - California Legislation Targets Private Equity And Hedge Fund Activity

• Two new California laws formalize restrictions on medical practice management platforms operated by private equity groups and hedge funds and increase the state’s oversight of certain healthcare transactions. Transactions in other states may be impacted if similar legislation is passed in those jurisdictions. SB 351 prohibits private equity groups or hedge funds from engaging in certain matters of professional judgment with respect to physician or dental practices in the state, including dictating which diagnostic tests are ordered, determining the necessity of outside provider referrals or consultations, controlling how many patients a physician or dentist treats, and maintaining responsibility for a patient’s overall care. SB 351 carves out the following administrative functions that cannot be delegated to an unlicensed entity: Owning or determining the content of patient medical records. Selecting, hiring, or firing of providers when that decision relates to clinical competency or proficiency. Setting parameters on entrance into payer contracts. Setting parameters specific to clinical competency or proficiency in contractual relationships with outside providers that relate to the delivery of patient care. Decision-making regarding billing and coding practices. Approving the selection of medical equipment and supplies for the practice.
• Physicians in private practice often prefer their work culture over that of their employed physician colleagues, according to the Medical Group Management Association. Key reasons include a greater sense of autonomy, deeper patient relationships, and more personal connection to their work. Those attributes include special management complexities that make success challenging, however.

• Private equity’s (PE) growing presence in health care is driving higher physician turnover and consolidation, according to Harvard Business School researchers. Professor Leemore Dafny and co-researchers found that physicians were likelier to leave their practices after PE investors exited, and those leaving were likelier to join larger practices, creating a ripple effect of talent consolidation and, as prior research shows, higher costs. Private equity firms typically hold medical practices for three to seven years, often consolidating them. Most sales, Dafny notes, are to other private equity firms. The data varies, but past studies have shown that many patients stay with their primary care physicians far longer, even for more than a decade. Those long-standing relationships lead to better care and health outcomes, prior research has found. There were 3,943 physician practice management (PPM) transactions in which private equity firms (PE) were involved during the past 10 years, according to Pitchbook. PEs focus on acquiring a sizable practice or a platform investment in the physician practice segment and then use this corporate foundation to expand through add-on acquisitions. The demand from PE remains robust, according to Pitchbook, resulting in a wave of outreach to physician practice owners nationwide.
• Physician practice employment and average wages for nonsupervisory employees increased slightly during the first seven months of 2025, according to the US Bureau of Labor Statistics (BLS). Revenue for physician offices increased 9.3% year over year and 3.9% quarter over quarter in the fourth quarter of 2024, according to the US Census Bureau. The Producer Price Index for physician practices increased 1.69% year over year in August, according to the BLS.