Health care districts: employment

The law creates a time-limited exception to California's general ban on corporate employment of physicians for certain financially vulnerable acute-care hospitals. It pairs that authority with safeguards for physician independence, existing medical-staff positions, and public reporting.

What the law does ​

• Allows qualifying health care districts and district-controlled nonprofits that own or control a general acute-care hospital to employ licensed clinicians and bill for their professional services until January 1, 2037.
• Limits eligibility to hospitals that received a Distressed Hospital Loan before 2025 or whose hospital and health system, if any, had Medicare and Medi-Cal payor mixes above 75 percent as of January 1, 2025.
• Requires medical-staff approval that the employment serves the hospital's communities and bars employers and their hospitals from directing physicians' professional judgment.
• Requires new employed positions to add to, rather than replace, medical-staff clinician positions that existed on January 1, 2026, while allowing mutually agreed contract changes.
• Requires employers to offer prospective clinician employees the option to contract with the facility instead.
• Requires annual online reports beginning in 2028 on physician recruitment and retention, separately identifying employed and contracted positions.

Who it affects ​

• Health care districts and district-controlled nonprofit corporations that own or control eligible general acute-care hospitals.
• Physicians, surgeons, and other licensed clinicians considered for employment or professional-services contracts.
• Medical staffs at qualifying hospitals.

Context ​

The employment authorization ends January 1, 2037, and the provision is repealed January 1, 2038.