Senate Bill No. 196 prohibits hospitals from entering into sale-leaseback transactions with real estate investment trusts (REITs) starting October 1, 2026. A sale-leaseback transaction is defined as an agreement where a hospital sells its main campus real property to a REIT and then leases it back. The bill also mandates that, beginning February 1, 2027, hospitals must submit annual attestations to the Department of Public Health (DPH) confirming that no private equity entity has a controlling interest in the hospital and that the hospital's license holder maintains full governance over its assets and activities. This includes ensuring that private equity entities do not influence clinical decisions or policies that could interfere with healthcare providers' professional judgment.

The bill incorporates definitions from existing law, including that of a "private equity entity" and a REIT, and requires the DPH commissioner to create a uniform template for hospitals to use for their attestations. Additionally, the bill clarifies that hospitals and their affiliates are not prohibited from investing in joint ventures. The legislation aims to safeguard the governance and clinical autonomy of hospitals from potential private equity control and influence, thereby ensuring that patient care remains the primary focus.