From the perspective of a practicing physician, the California regulatory environment may serve as an indicator of what lies ahead for the health care system. The state has moved quickly on payment reform, oversight of private equity in health care, limits on noncompete agreements, endorsement of universal health care coverage through Medicaid expansion, and the transition to value-based care with an emphasis on primary care outcomes, as per reports. This will likely become the national reality in other states, as suggested by the 2025 legislative Millbank report and Health Affairs report. Some of these are based on evidence-based studies from the California Health Care Foundation (CHCF) and the Integrated Healthcare Association’s California Regional Health Care Cost and Quality Atlas, implying California as a model state. Many of the pressures physicians face across the country — lower reimbursement, declining quality of care, growing administrative burden, consolidation of medical service organizations, and erosion of professional autonomy — have already reshaped daily practice in California.
For example, the rise of large integrated delivery systems and managed care models in the 1990s — most prominently exemplified by organizations such as Kaiser Permanente — foreshadowed the broader national shift toward coordinated care and capitated payment structures. Similarly, California’s early adoption of large-scale Medicaid expansion through Medi-Cal anticipated the nationwide coverage expansions later implemented through the Patient Protection and Affordable Care Act. Although federal action through the One Big Beautiful Bill has significantly defunded Medicaid federal contributions to states, including California, the state has continued moving toward value-based reimbursement/caps and increased regulatory oversight of health care consolidation, trends that are increasingly being debated and adopted in other states. Because California represents the largest health care market in the U.S. (up until 2020, 12.2% of total healthcare expenditure, or at least $411 billion) and often adopts policy reforms earlier and more comprehensively than other jurisdictions, the practice environment within the state frequently offers a preview of the structural pressures physicians nationwide may soon encounter.
California, legislatively and ideologically, is moving toward the idea of a unified publicly financed health care system that can provide coverage to all patients, with many advocacy organizations, including the California Physician Alliance. Programs such as CalAIM (California Advancing and Innovating Medi-Cal), alongside major behavioral health reforms launched in 2022 and 2023, are shifting the system away from fragmented, volume-driven reimbursement toward integrated, outcomes-focused care. Capitated and risk-based payment models reward care coordination, chronic disease management, prevention, and efficient use of resources — rather than visit counts or procedures performed.
At the same time, quality incentive programs and equity-focused practice transformation initiatives are pushing small private practices and safety-net clinics toward monthly per-member payments. These models place greater financial emphasis on prevention, caring for complex, high-need, and vulnerable populations. Success is increasingly measured by patient outcomes. As Medicaid expands nationally and cost containment becomes a political and fiscal priority, other states — and eventually private insurers — are likely to follow similar paths, whether we are prepared for it or not.
I personally practice value-based care by using my core clinical skills to narrow down my differential and only order necessary tests for the patient. I focus a lot on prevention and counseling of chronic neurological conditions with my patients. I discuss how other medical conditions can affect brain health. There has been a push from the American Academy of Neurology to focus on brain health as it pertains to prevention and long-term quality of life.
California’s regulatory environment is often portrayed by the media as prescriptive, a perception promoted by pro-business organizations, which see regulations as a constraint for launching and sustaining legally compliant businesses in the state. Others point out that in industries such as healthcare, which involves people’s lives, investor profit should not supersede any inch of social responsibility. The state’s standard for data privacy, oversight of insurance, and regulation on corporate involvement in medical practices exceeds those provided by federal protections. The state also proactively restricts the use of AI in healthcare, specifically prohibiting AI systems from using language that implies professional licensure. California mandates that nearly all prescriptions be transmitted electronically, including specific requirements for controlled substances. The state leads in providing comprehensive coverage for mental health and substance use disorders. These laws formalize California’s skepticism toward private equity and hedge fund influence in clinical care. They result in swinging the power of clinical decision-making, professional independence, and accountability to physicians instead of administrators.
As a solo entrepreneur/small business owner, I value policies that protect and respect my clinical autonomy, protect patients’ privacy, independence to practice for multiple healthcare systems without contract limits, and empower licensed clinicians in the medical decision-making process, effectively prohibiting private equity from setting cost-saving or profit-generating standards that go against patient well-being. Most importantly, legislation that took effect on Jan. 1, 2026 — most notably SB 351 and AB 1415 — reinforces clinical autonomy. SB 351 explicitly limits the ability of financial sponsors and management services organizations to interfere with clinical judgment, staffing decisions tied to competency, billing practices, payer contracting, and care delivery. It also regulates post-transaction noncompete, nondisparagement provisions and enforcement authority to the California Attorney General. AB 1415 adds another layer by expanding reporting requirements and granting the Office of Healthcare Affordability greater authority to review healthcare transactions for cost and market impact.
The national debate around noncompete agreements briefly accelerated when the Federal Trade Commission finalized a rule in 2024 that would have banned most noncompete clauses nationwide. However, the rule was subsequently blocked in federal court, leaving regulation largely to individual states. As a result of California Business and Professions Code Section 16600, California remains one of the most visible examples of how healthcare labor markets operate without these restrictions, offering a real-world case study of what medicine could look like without physician noncompete agreements.
In my own experience operating as an independent contractor through an S-corp, noncompete protections have been central to my professional growth. I’ve been able to practice across multiple healthcare systems, negotiate compensation more fairly, and focus on delivering high-value care rather than maximizing volume or billing codes. Clinically, it has been my practice to order fewer unnecessary tests in the hospital and emphasize timely outpatient referrals once acute conditions are ruled out — decisions aligned with both patient outcomes and value-based principles. I also focus heavily on counseling to prevent readmission to the hospital for certain acute neurological conditions like stroke and seizures. Finally, my ability to address patient care issues is pivotal, as I can terminate business relationships with organizations that do not value ethical, evidence-based care.
Private equity remains active in California health care, but it operates under a different incentive structure. Robust enforcement of corporate practice of medicine rules and transaction oversight limits the ability of investors and management entities to directly control clinical decision-making, staffing ratios, or utilization patterns. Productivity expectations still exist, but they are shaped by appropriate operational efficiency that does not sacrifice quality/safety, rather than by patient volume or hours worked. While this framework is far from perfect, it offers a counterbalance to unchecked consolidation and preserves the centrality of clinical judgment.
In my own practice, I avoid doing business completely with private equity (PE) entities. The testimonies I have collected from peers and mentors alike portray the daily conflicting priorities between caring for the patients and generating a profit. PE firms do not care about improving healthcare; they care about fixing numbers, even if it means cutting staff, equipment, and PPE in an effort to decrease operational costs and increase profit margins. A 2024 CHCF report specifically found that PE firms increased health care costs for patients and insurers, decreased patient satisfaction, worsened staff shortages, and worsened health care outcomes. Physicians took an oath to practice medicine ethically and put the needs of patients over those of investors, and it is important to see people as people and not some magic number.
The forces reshaping healthcare in California — payment reform, value-based care, universal coverage, regulatory oversight, roadblocks for consolidation, and shifting physician leverage — will likely spread to other states. This is good for physicians with a strong moral compass and a high sense of clinical autonomy and independence. We are the captains of the ship, and I support any legislation that keeps the decision-making power in our hands.
Dr. Rocha Cabrero (double board-certified neurologist/clinical neurophysiologist, leader, activist, mentor, writer, son, brother, husband, father, he/him) is the CEO/owner of IRD Neuroanalysis Inc. Dr. Rocha is involved in different projects related to clinical medicine, writing, advocacy/policy, mentoring, and leadership across fields. His primary training focuses are epilepsy and neurointraoperative monitoring (NIOM). He also enjoys spending time with his infant son, traveling, dancing, EDM concerts, beach walks, and catching up with friends and family. Dr. Rocha Cabrero is a 2025–2026 Doximity Op-Med Fellow.
Illustration by Diana Connolly
