Private equity groups have significantly expanded their footprint in healthcare and in the ASC industry over the last decade — and several states have responded with new, stricter regulations around corporate healthcare deals.
Here is a look at three different states’ approach to regulating private equity activity in healthcare in the last year.
1. California
In October, Governor Gavin Newsom signed a piece of legislation that codified restrictions on PE firms and hedge funds from influencing the decision-making of physicians in the state. The law specifies that private equity firms, hedge funds and their affiliates may not interfere with the professional judgement of healthcare professionals in clinical decision-making, contractually or otherwise. This includes decisions about diagnostic tests, treatment options, patient volume or referral requirements.
2. Oregon
Oregon Gov. Tina Kotek signed a bill June 9 that enacted the strictest regulatory framework in the country on private equity and corporate ownership of medical practices.
The law allows a three-year transition period for compliance and mandates that physicians maintain at least a 51% ownership stake in most practices. It also bars corporations and management service organizations from exerting decision-making control over medical groups.
Institutions such as hospitals, tribal health facilities, behavioral health facilities and crisis lines are exempt from the new rules. Supporters said that the legislation is a necessary corrective to increased “corporatization” of healthcare facilities within the state.
3. Maine
In June, the state legislature placed a one-year moratorium on the purchase of hospitals by PE or real estate investment trusts. It also created a legislative commission to make recommendations about a path forward with a report to the Health Care, Insurance and Financial Services Committee. Those recommendations are due Dec. 10, according to Bangor Daily News.
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