On May 20, 2021, the California Senate Appropriations Committee placed Senate Bill 642 (“SB 642”) on the “2-year” bill list, meaning that the proposed legislation will not move forward in the current legislative session.

SB 642 threatened to significantly impact management and governance rules applicable to California medical practices and other health care providers. In particular, the bill proposed to prohibit hospitals and other health care providers from requiring their medical staffs to adhere to certain policy and practice limitations. The legislation also would have imposed limitations on certain contractual arrangements between professional medical corporations and non-physician entities, such as licensed health care providers and private equity investors. To read more about the proposed legislation, please see our prior alert here.

Placement of the bill on the “2-year” list allows hospitals, private equity investors, and other health care stakeholders to breathe easier for the time being. Although the bill will not be acted on this year, it is possible that it could resurface in next year’s Legislative Session (2022-2023), either in its current form or as an amended version. Polsinelli will continue to monitor updates to this and other similar efforts that may arise in California of interest to health care clients and stakeholders.