Assembly BillChaptered/SignedBusiness and Professions
AB 2311: Health care districts: employment.
What AB 2311 does, verified September 20, 2026
The bill aims to amend the law regarding the employment of physicians and surgeons in health care districts. Currently, the law restricts the employment of medical professionals by corporations or artificial entities that do not charge for professional services and are approved by the Medical Board of California. The bill would create an exemption for health care districts and certain nonprofit corporations that own or control a general acute care hospital, allowing them to employ physicians and surgeons and charge for professional services. The health care district would not be allowed to interfere with or control the professional judgment of the physician or surgeon.
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Last action: Chaptered by Secretary of State - Chapter 299, Statutes of 2026. (2026-09-18)Alert me
Author and sponsors
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| Sep. 18, 2026 | Chaptered by Secretary of State - Chapter 299, Statutes of 2026. |
| Sep. 18, 2026 | Approved by the Governor. |
| Sep. 03, 2026 | Enrolled and presented to the Governor at 4 p.m. |
| Aug. 26, 2026 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 6582.). |
| Aug. 25, 2026 | In Assembly. Concurrence in Senate amendments pending. |
Latest bill textEnrolled version, August 30, 2026 · 1,908 words
| Enrolled August 30, 2026 |
| Passed IN Senate August 25, 2026 |
| Passed IN Assembly August 26, 2026 |
| Amended IN Senate August 13, 2026 |
| Amended IN Senate July 02, 2026 |
| Amended IN Assembly May 19, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Assembly Bill
No. 2311
| Introduced by Assembly Member Schiavo (Coauthor: Assembly Member Sharp-Collins) (Coauthors: Senators Grove and Valladares) |
February 19, 2026 |
An act to amend, repeal, and add Section 2401 of the Business and Professions Code, relating to healing arts.
LEGISLATIVE COUNSEL'S DIGEST
AB 2311, Schiavo. Health care districts: employment.
Existing law, the Medical Practice Act, restricts the employment of physicians and surgeons or doctors of podiatric medicine by a corporation or other artificial legal entity to entities that do not charge for professional services rendered to patients and are approved by the Medical Board of California, subject to specified exemptions. Existing law, the Local Health Care District Law, regulates the organization and management of health care districts. Existing law establishes the Department of Health Care Access and Information and charges it with various duties related to health planning and research development.
This bill would, until January 1, 2037, establish an exemption to the general prohibition described above by authorizing health care districts and nonprofit corporations with a health care district as its sole corporate member that own or control a general acute care hospital to employ physicians and surgeons and charge for professional services, provided specified conditions are met, including prohibiting the health care district or nonprofit corporation, and any hospital under its ownership or control, from interfering with, controlling, or otherwise directing the professional judgment of a physician or surgeon. The bill would require a health care district or nonprofit corporation that employs licensees and charges for professional services under the bill to publish an annual report, as provided, on their internet website that includes data about the ability of general acute care hospitals under their ownership and control to recruit and retain physicians and surgeons, as specified.
The people of the State of California do enact as follows:
SECTION 1.
Section 2401 of the Business and Professions Code is amended to read:2401.
(a) Notwithstanding Section 2400, a clinic operated primarily for the purpose of medical education by a public or private nonprofit university medical school, which is approved by the board or the Osteopathic Medical Board of California, may charge for professional services rendered to teaching patients by licensees who hold academic appointments on the faculty of the university, if the charges are approved by the physician and surgeon in whose name the charges are made.(b) Notwithstanding Section 2400, a clinic operated under subdivision (p) of Section 1206 of the Health and Safety Code may employ licensees and charge for professional services rendered by those licensees. However, the clinic shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.
(c) Notwithstanding Section 2400, a narcotic treatment program operated under Section 11876 of the Health and Safety Code and regulated by the State Department of Health Care Services, may employ licensees and charge for professional services rendered by those licensees. However, the narcotic treatment program shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.
(d) Notwithstanding Section 2400, a hospital that is owned and operated by a licensed charitable organization, that offers only pediatric subspecialty care, that, before January 1, 2013, employed licensees on a salary basis, and that has not charged for professional services rendered to patients may, commencing January 1, 2013, charge for professional services rendered to patients, provided the following conditions are met:
(1) The hospital does not increase the number of salaried licensees by more than five licensees each year.
(2) The hospital does not expand its scope of services beyond pediatric subspecialty care.
(3) The hospital accepts each patient needing its scope of services regardless of the patient’s ability to pay, including whether the patient has any form of health care coverage.
(4) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.
(5) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.
(e) Notwithstanding Section 2400, a federally certified critical access hospital may employ licensees and charge for professional services rendered by those licensees to patients, provided both of the following conditions are met:
(1) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.
(2) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.
(f) (1) Until January 1, 2037, and notwithstanding Section 2400, a health care district, organized and governed pursuant to Division 23 (commencing with Section 32000) of the Health and Safety Code, or a nonprofit corporation with a health care district as its sole corporate member, as described in subparagraph (B) of paragraph (1) of subdivision (h) of Section 14169.31 of the Welfare and Institutions Code, that owns or controls a general acute care hospital may employ licensees and charge for professional services rendered by those licensees, provided all of the following conditions are met:
(A) The hospital is a licensed acute care hospital, as defined in subdivision (a) or (b) of Section 1250 of the Health and Safety Code, and satisfies either of the following conditions:
(i) Was awarded a loan under the Distressed Hospital Loan Program (Chapter 4 (commencing with Section 129380) of Part 6 of Division 107 of the Health and Safety Code) before January 1, 2025.
(ii) (I) Has a combined Medicare and Medi-Cal payor mix greater than 75 percent, as determined using the adjusted patient days from the Department of Health Care Access and Information annual financial disclosure report, and as recorded and calculated as of January 1, 2025, pursuant to the Department of Health Care Access and Information guidance.
(II) For purposes of qualifying based on payor mix of Medicare and Medi-Cal pursuant to this clause, both the hospital and the health care system to which it belongs, if any, shall have a payor mix of greater than 75 percent.
(B) The medical staff concur by an affirmative vote, pursuant to the medical staff bylaws, that the licensee’s employment is in the best interest of the communities served by the hospital.
(C) The health care district or nonprofit corporation, and any hospital under its ownership or control, shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon.
(D) The licensee positions employed by the health care district or nonprofit corporation are in addition to, and do not supplant, any licensee positions providing professional services as a member of the medical staff at any hospitals owned or controlled by the health care district or nonprofit corporation, as of January 1, 2026. This subparagraph does not prohibit a health care district or nonprofit corporation from negotiating or amending existing contracts for professional services upon mutual agreement of the parties to the contract.
(E) The health care district or nonprofit corporation shall affirmatively offer a licensee who is a prospective employee the option to contract with the facility in lieu of employment.
(2) (A) Commencing January 1, 2028, a health care district or nonprofit corporation, that is employing licensees and charging for professional services rendered by those licensees to patients under this subdivision shall publish on its internet website, on or before July 1 of each year, a report for any year in which that health care district or nonprofit corporation has employed or is employing licensees and charging for professional services rendered by those licensees to patients.
(B) The report shall include data about the ability of general acute care hospitals under the health care district’s or nonprofit corporation’s ownership and control to recruit and retain physicians and surgeons during the prior year, as well as the total number of physicians and surgeons recruited and retained to date since January 1, 2027, reported separately by employment and contracted positions.
(g) This section shall become inoperative on July 1, 2037, and, as of January 1, 2038, is repealed.
SEC. 2.
Section 2401 is added to the Business and Professions Code, to read:2401.
(a) Notwithstanding Section 2400, a clinic operated primarily for the purpose of medical education by a public or private nonprofit university medical school, which is approved by the board or the Osteopathic Medical Board of California, may charge for professional services rendered to teaching patients by licensees who hold academic appointments on the faculty of the university, if the charges are approved by the physician and surgeon in whose name the charges are made.(b) Notwithstanding Section 2400, a clinic operated under subdivision (p) of Section 1206 of the Health and Safety Code may employ licensees and charge for professional services rendered by those licensees. However, the clinic shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.
(c) Notwithstanding Section 2400, a narcotic treatment program operated under Section 11876 of the Health and Safety Code and regulated by the State Department of Health Care Services, may employ licensees and charge for professional services rendered by those licensees. However, the narcotic treatment program shall not interfere with, control, or otherwise direct the professional judgment of a physician and surgeon in a manner prohibited by Section 2400 or any other law.
(d) Notwithstanding Section 2400, a hospital that is owned and operated by a licensed charitable organization, that offers only pediatric subspecialty care, that, before January 1, 2013, employed licensees on a salary basis, and that has not charged for professional services rendered to patients may, commencing January 1, 2013, charge for professional services rendered to patients, provided the following conditions are met:
(1) The hospital does not increase the number of salaried licensees by more than five licensees each year.
(2) The hospital does not expand its scope of services beyond pediatric subspecialty care.
(3) The hospital accepts each patient needing its scope of services regardless of the patient’s ability to pay, including whether the patient has any form of health care coverage.
(4) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.
(5) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.
(e) Notwithstanding Section 2400, a federally certified critical access hospital may employ licensees and charge for professional services rendered by those licensees to patients, provided both of the following conditions are met:
(1) The medical staff concur by an affirmative vote that the licensee’s employment is in the best interest of the communities served by the hospital.
(2) The hospital does not interfere with, control, or otherwise direct a physician and surgeon’s professional judgment in a manner prohibited by Section 2400 or any other law.
(f) This section shall become operative on July 1, 2037.
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