California’s New Healthcare Transaction Regulations Clarify Filing Requirements for PE Funds, Hedge Funds and MSOs

Background

The Office of Health Care Affordability (OHCA) issued new amended cost and market impact review (CMIR) regulations that take effect Nov. 2, 2026. The regulations replace interim guidance on who must file notice with OHCA, when to file and what the notice must include. The updated regulations were adopted to implement and enforce Assembly Bill 1415, effective Jan. 1, 2026, which created a new class of “noticing entities,” including private equity groups, hedge funds, management services organizations (MSOs), newly created acquisition entities, and entities that own, operate, or control a provider. The new class of noticing entities builds upon the existing framework of the California healthcare transaction notice laws previously discussed in December 2022, March 2025, and October 2025. The regulations also require new information that will add time to the preparation of these submissions.

Key Changes

1. Private equity groups, hedge funds, MSOs, newly created acquisition vehicles and certain other entities now have independent filing obligations as “noticing entities,” alongside healthcare entities, for material change transactions.
2. A private equity or hedge fund investment resulting in a 10% or greater holding or an investment carrying governance, veto, management, fee or capital-deployment rights may now qualify as a material change transaction, requiring submissions.
3. Certain sale-leaseback and other real estate transactions involving sites that provide healthcare now constitute material change transactions and can also lead to CMIR.
4. Notices must include significantly more information than before, including portfolio company lists, debt ratios, 5% ownership charts, valuation materials, and management compensation and incentives, including those tied to closing.
5. A new, standalone confidentiality section (Section 97437), a new remand option for OHCA on review of a CMIR determination and expanded tolling may impact deal timing and strategy.

Who Must File and When

Noticing entities that are parties to covered transactions with a healthcare entity or MSO now must file their own notices separate from the other parties. Like healthcare entities subject to the notice requirement, noticing entities must file notice of a material change transaction at least 90 days before closing. For sponsors, the acquisition vehicle, the holding company and the sponsor fund may each have separate filing obligations. An entity that is both a healthcare entity and a noticing entity files a single notice containing the information required of both categories.

MSOs may be required to file if they meet specified affiliation criteria, such as sharing one or more directors, officers or investors with a healthcare entity or being affiliated with at least two of the following: a payer, two or more physician organizations, or a hospital. Covered transactions include those in which a filing is required when (a) an MSO provides management services to a healthcare entity meeting the $25 million threshold; (b) an MSO serves two or more providers that collectively generate $10 million in annual California-derived revenue; or (c) an MSO is party to a transfer of control of a healthcare entity.

For funds, the main trigger for filing notice is holding (post-closing) 10% or more of a covered healthcare entity’s or MSO’s assets, equity, debt, or liabilities. OHCA raised the threshold from the 5% initially proposed, citing alignment with the Hart-Scott-Rodino framework. Because the test reaches debt and liabilities, credit funds and other lenders should not assume it applies only to private equity sponsors.

Staying under the 10% threshold is not a safe harbor. A fund acquiring any interest together with control rights, such as the ability to appoint leadership, veto major decisions, approve debt, manage under a management agreement, charge fees or direct the use of capital, may also trigger a notice requirement. Club deals and co-investments should be analyzed on a combined basis, and the analysis should cover the sponsor’s full set of contractual rights, not just the cap table.

Separately, certain real estate transactions, including sale-leaseback arrangements involving real estate investment trusts (REITs), may trigger a filing if the property goes to an entity other than the acquirer or its direct parent and the surviving healthcare entity must lease or pay rent for it.

Disclosure Requirements

The amended regulations substantially expand the information and supporting documentation required for OHCA notices. In the public notice, a private equity group or hedge fund must identify the healthcare entities and MSOs owned, controlled or financed by its participating asset managers and funds. Submitters must also describe post-transaction changes to ownership (including all 5% or greater owners and intermediate entities up to the ultimate parent, which is separate from the 10% threshold for filing described above), governance, real estate and employment protections, as well as anticipated cost savings, quality investments, price reductions and service expansions.

For funds, required documents now include, without limitation, documentation of debt-to-enterprise-value or debt-to-equity ratios, debt sources and post-recapitalization debt ratios, plus, for all submitters, letters of intent, leaseback or certain other property agreements, valuation materials, organizational charts showing all 5% or greater owners, investor and board materials supporting the notice, and financial incentives for officers, directors, and managers, including those contingent on closing. A submitter may cross-reference another party’s submission for the same transaction rather than duplicate it, which may be common (discussed above). These requirements are in addition to the existing submission requests.

Confidentiality

The new Section 97437 consolidates and expands the confidentiality rules and now applies to notices, expedited review requests and CMIRs. Information is public unless designated nonpublic, and a request must explain the grounds for confidentiality, the period needed for such confidential treatment and how the information has been confidentially maintained by the parties. A submitter requesting confidentiality for an entire document must mark each page; a redacted version is required only for partial requests.

Importantly for sponsors whose information is filed by a portfolio company or co-investor, a submitter lacking personal knowledge may support confidentiality with a declaration from the party that supplied the information. During a CMIR, confidentiality requests are made through a new response log.

Review Process and Timing

The familiar 90-day notice and 45-/60-day OHCA response periods remain, but a notice is complete only when every required healthcare entity and noticing entity has filed. The response periods are now also explicitly tolled while OHCA awaits requested information from the parties or a third party, which is typical even if it was not necessarily stated in the regulation. Taken together, the additional filing burdens, the additional parties and explicit tolling may lengthen review periods (or recognize existing OHCA practice).

In deciding whether to conduct a CMIR, OHCA may now consider whether a transaction involves a REIT or other investing party whose terms could weaken the healthcare entity’s finances or place access to care at risk, such as by increasing its debt. When a submitter requests review of OHCA’s determination to conduct a CMIR, the director may now remand for OHCA to make an additional 30-day review, which OHCA may extend for good cause, after which the director will either uphold the determination or waive the CMIR. In practice, a remand can extend deal timelines by more than 30 days beyond the other time periods.

Conclusion

With the regulations taking effect on Nov. 2, 2026, sponsors investing in California healthcare companies should (a) determine whether each fund, acquisition vehicle, MSO and portfolio company must file; (b) build the 90-day notice period, tolling and a possible CMIR into signing-to-closing timelines, outside dates and closing conditions; (c) assemble the required portfolio, leverage, valuation, investor and incentive materials before signing; and (d) prepare confidentiality requests and supporting declarations for the application.

McGuireWoods’ healthcare transactions team, which brings together regulatory, corporate and antitrust lawyers, has significant experience  with state healthcare filings, including OHCA’s CMIR process. For further information, contact the authors or a member of the Healthcare Transactions & Finance Practice Group.