By: Shur Erdenekhuu and Mena Arsalai
On October 11, 2025, Governor Gavin Newsom signed Assembly Bill 1415 (“AB 1415”) into law. The bill amends the California Health Care Quality and Affordability Act by establishing reporting and notice requirements for certain “noticing entities” engaged in healthcare-related transactions, including private equity groups, hedge funds, management services organizations (“MSOs”), and newly formed entities created for the purpose of transacting with health care entities.
Effective January 1, 2026, AB 1415 formally codifies the category of “noticing entities” and mandates that all entities falling within this definition provide the Office of Health Care Affordability (“OHCA”) with written notice at least 90 days prior to entering into any transaction constituting a “material change” to the entity’s structure or operations.
Who Must Report?
In addition to the existing reporting obligations applicable to “health care entities,” AB 1415 extends notice requirements to any “noticing entity,” which includes all of the following:
- A private equity group or hedge fund.
- A newly created business entity formed for the purpose of entering into agreements or transactions with a health care entity.
- A MSO.
- An entity that owns, operates, or controls a provider, regardless of whether the provider is actively operating, providing health care services, or holds a current, pending, or suspended license.
AB 1415 defines MSO as “an entity that provides management and administrative support services for a provider in support of the delivery of health care services, excluding the direct provision of health services,” which may include “provider rate negotiation, revenue cycle management, or both.” AB 1415 also introduces definitions to “hedge fund” and “private equity group.”
What is Reportable?
A “noticing entity” must provide written notice to OHCA prior to engaging in a transaction with any payer, provider, or fully integrated delivery system that involves either of the following:
- The sale, transfer, lease, exchange, option, encumbrance, conveyance, or other disposition of a material amount of the assets of a health care entity or an MSO; or
- The transfer of control, responsibility, or governance over a material amount of the assets or operations of a health care entity or an MSO.
Additionally, MSOs must provide OHCA notice of any agreement or transaction described above when between the MSO and “any other entity.” This means MSOs must provide notice even when the other party is not a “noticing entity.”
Additional Reporting Requirement for MSOs
AB 1415 adds Section 127501.5 that authorizes OHCS to collect information from MSOs: “The office shall, in a manner prescribed by the office, establish requirements for management services organizations to submit data and other information as necessary to carry out the functions of the office.”
When Must Reporting Occur?
Notice must be submitted to OHCA at least 90 days before the parties enter into any reportable agreement or transaction.
How Does AB 1415 Impact Your Friendly-PC or MSO?
For newly formed friendly-PC structures, or for investors seeking to invest in healthcare entities through such structures, AB 1415 will require pre-closing notice to OHCA whenever the formation, acquisition, or execution of a management services agreement constitutes a material change transaction under the statute.
Existing friendly-PC or MSO arrangements are not subject to retroactive reporting; however, any new material change (e.g., a sale, transfer of equity or governance rights, restructuring, refinancing, or recapitalization) will trigger the 90-day notice requirement. As a result, even routine ownership or organizational adjustments may face added regulatory steps and potential delays.
If you have further questions in anticipation of the January 1, 2026 effective date, please contact the healthcare team at Wilke Fleury.
