Uncertainty surrounding control over physician practices and decision-making power at healthcare organizations has reached a crescendo in 2026 as hospitals, staffing firms and private equity groups grow their influence in markets across the country.
Three recent physician contracting cases have tested the question of corporate influence in medicine, all producing different results:
Case No. 1: GWU offloads $450M in losses — and keeps its medical school
Washington, D.C.-based George Washington University had been absorbing losses from its affiliated physician group, Medical Faculty Associates, since bringing the group formally under its control in 2018. By fiscal year 2025, the accumulated deficit had grown to roughly $450 million, with the university lending MFA $98 million in that year alone.
On May 26, GWU and King of Prussia, Pa.-based Universal Health Services announced a deal to restructure it. Under the terms, UHS will absorb financial and operational responsibility for MFA by folding the group into a new nonprofit entity, Capital Medical Group, which UHS will control. The university will retain its academic and educational affiliations with the group, and Capital Medical said it plans to hire the majority of MFA’s physicians and staff while continuing to provide services to GW Hospital and Cedar Hill Regional Medical Center.
The structure is notable for what it avoids: UHS is not acquiring MFA in a traditional transaction. Instead, GWU transfers financial risk and operational control while retaining the faculty appointments and research missions that define its identity as an academic medical center — a tradeoff that GW President Ellen Granberg, PhD, characterized as deliberate.
“We achieved the core outcomes we needed: A sustainable framework, continuity of clinical services and a structure that maintains faculty roles and supports our education and research missions,” Dr. Granberg wrote in an online FAQ published May 26. “At the same time, I want to be candid — agreements like this involve trade-offs. No one gets everything they want.”
Dr. Granberg acknowledged that work remains to honor an agreement that supports all parties’ goals. For academic medical centers watching from the outside, the GWU-UHS deal offers a template for separating financial liability from mission affiliation.
Case No. 2: PeaceHealth reverses course after physicians, staff and Oregon law push back
In February, Vancouver, Wash.-based PeaceHealth announced it would not renew its contract with Eugene Emergency Physicians, the group that had staffed Lane County emergency departments since 1991. Following a proposal process, PeaceHealth selected Atlanta-based ApolloMD to take over staffing at three Oregon emergency departments.
All 41 EEP clinicians declined to join ApolloMD’s newly formed entity, Lane Emergency Physicians, pledging not to do so for at least 90 days. Medical staff at all three hospitals voted no confidence in PeaceHealth leadership and formally voted to restore EEP as the ED provider group. On March 20, EEP filed a lawsuit in Oregon state circuit court seeking to block the transition.
The lawsuit’s legal foundation was Oregon Senate Bill 951, a 2025 law that sets some of the nation’s strictest limits on corporate control of medical practices, including restrictions on management services organizations and a ban on noncompete agreements that prevent physicians from joining other practices. EEP alleged that while Lane Emergency Physicians nominally held the staffing contract and was technically physician-owned, ApolloMD retained significant control over staffing, hiring and other operations — precisely the kind of structure SB 951 was designed to prohibit.
ApolloMD countered that Lane EP makes all clinical decisions and that the company provides only nonclinical administrative support in full compliance with state law. The case marked the first legal test of SB 951 since it took effect in June 2025.
PeaceHealth reversed course on May 6, announcing plans to offer EEP a renewed two- to three-year contract at its Cottage Grove and RiverBend locations.
“Our shared responsibility is clear: to ensure a well-staffed emergency department that delivers safe, reliable care for every patient,” Heather Wall, RN, interim chief executive of PeaceHealth’s Oregon region, said in a statement to Becker’s. “That remains unchanged, and we will take the steps necessary to meet that responsibility.”
The operational reversal came before the legal question was resolved. The lawsuit remains pending, meaning SB 951’s enforceability — and the precise boundaries of what corporate control a staffing arrangement may and may not involve — has not been adjudicated. That question will resonate far beyond Oregon. In 2025 alone, 37 state measures targeting healthcare consolidation and competition were enacted, and numerous states have introduced similar legislation since.
Case No. 3: A California physician’s firing tests the limits of PE control
The California case began with a transaction that has become common across specialty medicine. In 2019, physicians at a California fertility practice sold a 51% stake to Women’s Care Enterprises, a private equity-backed management services organization. Under the arrangement, the MSO would provide nonclinical administrative services and the medical practice would remain under physician ownership.
The dispute began when the private equity firm demanded the physician-owner fire two employee physicians. One resigned, while the physician-owner refused to dismiss the other. The firm then terminated his consulting contract and invoked a provision allowing it to replace him with a physician of its own choosing.
In March 2024, a Los Angeles Superior Court ruled the arrangement violated California’s ban on the corporate practice of medicine, finding that the contract gave the private equity firm undue control over the physician and that the removal clause alone placed physicians in an untenable position under state law. The case is now before the California 2nd District Court of Appeal.
California Attorney General Rob Bonta filed an amicus brief in April supporting the trial court’s finding, framing the case as a test of whether contractual structures can be used to circumvent a longstanding state prohibition.
“State law is clear: Medical decisions must be made by licensed physicians, not unduly influenced by corporate interests,” Mr. Bonta said in the brief. “As private equity investment in healthcare grows, we must reaffirm our commitment to California’s prohibition on the corporate practice of medicine and ensure patients remain our top priority.”
The California Medical Association, backed by the American Medical Association’s Litigation Center, filed a separate amicus brief that took a more cautious position. The CMA warned against categorical prohibitions on physician removal clauses, noting they are widespread across physician-MSO arrangements statewide, and called instead for a fact-based standard that evaluates whether undue clinical influence has actually been transferred in a given deal.
“Erecting rigid barriers in the enforcement of the corporate practice of medicine statute could have the unintended consequence of stifling innovation and the evolution of healthcare, resulting in significant disruption to many current physician alignments,” the CMA brief said.
The appellate ruling will carry weight across an industry that has changed significantly. Private equity investment in physician practices has grown roughly sixfold since 2012, from 75 firms to 484 by 2021, according to analysis cited in the AMA’s amicus materials. In specialties such as dermatology, gastroenterology and ophthalmology, PE involvement now exceeds 30% of practices.
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