At least 25 states have proposed or enacted laws restricting private equity’s involvement in healthcare, according to an Aug. 25 report from Stateline.
The regulatory push appears to be having an effect, with the number of private equity-involved healthcare deals declining in the first half of 2026 compared with the same period in 2025, and physician practice management deals — once one of the sector’s most active categories — are on pace to fall by about half this year, according to PitchBook data cited in the report.
The trend reflects mounting scrutiny of an investment strategy that has poured $1 trillion into acquiring healthcare companies over the past decade, according to the Commonwealth Fund. Research has tied private equity ownership to worse outcomes in some settings: A 2023 study found private equity involvement increased nursing home death rates by 11%, and a separate Weill Cornell Medicine study linked private equity ownership to more emergency room visits, more hospitalizations and higher Medicare costs among long-stay nursing home residents. Financial distress has followed the investments, too — almost 90% of financially stressed healthcare companies are private equity-owned, according to a 2022 Moody’s Investors Service report cited by Stateline.
State attorneys general and lawmakers are citing that evidence as they write new rules. California, Oregon and Rhode Island implemented transparency requirements in 2026 that give regulators more visibility into private equity healthcare transactions before they close. Connecticut passed what Stateline described as the country’s strongest accountability law for private equity-owned nursing homes, and Hawaii, Indiana, New York, Pennsylvania, Vermont and Virginia have introduced additional oversight legislation this year.
Rhode Island Attorney General Peter Neronha, pointed to affordability and access as the driving concerns behind his state’s new rule.
“Private equity and increasing market consolidation drive up the cost of care, further inhibiting patient access,” Mr. Neronha said in a January statement announcing the regulation. The added oversight is meant to give his office “a bird’s eye view to ensure that future medical group mergers do not harm Rhode Islanders’ access to health care services,” he added.
The enforcement mechanisms vary by state, but the shared thread is disclosure: Regulators want earlier notice of deals so they can review the effects on pricing, staffing and access before a transaction closes. For hospital and health system leaders weighing private equity partnerships — or competing against private equity-backed rivals — that shift likely means more paperwork and longer timelines ahead, even in states that haven’t passed a law yet.
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