For the past decade, private equity’s physician practice strategy has followed a relatively consistent formula in which firms buy a platform practice, add regional practices and sell within three to five years.
In corporate practice of medicine states, that often means operating through management services organizations. Heading into 2027, the formula is under pressure from lawmakers and the market at the same time.
Eight states enacted new laws in 2026 broadening oversight of private equity in healthcare, according to the Private Equity Stakeholder Project’s 2026 State Healthcare Policy Review. Maine now lets regulators approve, condition or reject covered deals, Connecticut banned hospital sale-leasebacks outright, and California and Oregon began implementing laws passed in 2025.
“States across the country are taking a much closer look at how private equity operates in healthcare and where existing oversight falls short,” said Michael Fenne, senior policy coordinator at PESP.
At least 25 states have now proposed or enacted restrictions, and the pressure is showing up in deal flow, with physician practice management deals on pace to fall by about half this year, according to PitchBook data cited by Stateline.
A federal bill introduced Sept. 16 would go further. The Stop Corporate Takeovers of Physicians Act of 2026 is sponsored by Sens. Elizabeth Warren, D-Mass., Ron Wyden, D-Ore., and Jeff Merkley, D-Ore., and three House Democrats, and is modeled on Oregon’s SB 951. It would require practices to be majority-owned and controlled by physicians and bar MSOs from owning or controlling the practices they manage. Violators could face court-ordered divestiture.
If the bill is enacted in its current form, “a significant number of existing physician practice transactions involving private equity sponsors and MSO-based structures would likely require either substantial restructuring to achieve compliance or unwinding entirely,” according to a Sept. 25 analysis from law firm Foley & Lardner.
While passage of the bill looks unlikely as no Republicans have signed on, some physicians said the bill targets the right structure.
“This bill goes directly at that structure, which is the correct target and something no state enforcement has meaningfully done,” Travis Doering, MD, a hand surgeon at Upper Extremity ATX in Austin, Texas, told Becker’s.
The regulatory push is landing on a model already straining at the exit. Only about 18% of a 2021 buyout cohort had exited by year four, compared with 32% of a 2017 cohort at the same point, according to a Sept. 1 VMG Health report citing PitchBook. VMG Health pointed to health systems as private equity’s likely next strategic buyer.
That is where critics see a flaw. The federal bill exempts hospitals and nonprofit providers, and several physician leaders said the carve-outs could push physicians toward hospital employment rather than independence.
“A bill that bans one corporate owner and exempts the larger one doesn’t restore physician independence — it just changes the logo on the badge,” Dr. Doering said.
The evidence points to a squeeze rather than a collapse: longer hold periods, earlier regulatory review and fewer clean exits. For health system leaders, 2027 may be less about watching private equity retreat than about deciding whether to buy what it’s trying to sell.
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