A federal bill introduced Sept. 16 would do more than bar private equity firms from owning physician practices. It targets the management services organization structure PE-backed platforms have used to operate in corporate practice of medicine states, and it would give regulators, state attorneys general and private plaintiffs the power to force divestitures.
The Stop Corporate Takeovers of Physicians Act of 2026 was introduced by Sens. Elizabeth Warren, D-Mass., Ron Wyden, D-Ore., and Jeff Merkley, D-Ore., along with Reps. Val Hoyle, D-Ore., Alexandria Ocasio-Cortez, D-N.Y., and Suhas Subramanyam, D-Va. It would create a federal ban on the corporate practice of medicine and is modeled on Oregon’s SB 951, enacted in 2025.
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.
Here is a closer look at what the legislation would do, and where sources see gaps.
Who could own a practice
The bill would make it unlawful for any entity that is not majority-owned and controlled by licensed physicians to own or control a medical practice, employ or contract for a physician’s professional services, or practice medicine. Licensees would need to hold a majority ownership interest and make up a majority of the entity’s governing body.
Physician owners would also have to be licensed and present in a state where the practice furnishes services and be “substantially engaged in delivering medical care.” The Foley analysis said the provision is aimed at the “friendly physician” model, in which a physician holds nominal ownership of practices across multiple states without meaningful clinical involvement.
Nonprofit and public providers, hospitals, hospital-affiliated clinics, critical access hospitals and rural emergency hospitals are exempt.
Travis Doering, MD, a hand surgeon at Upper Extremity ATX in Austin, Texas, told Becker’s the bill goes after the right structure. Texas has banned corporate ownership of medical practices for a century, he said, but PE entered through MSOs with a friendly physician holding nominal title.
“This bill goes directly at that structure, which is the correct target and something no state enforcement has meaningfully done,” Dr. Doering said.
What the bill would do
The bill’s MSO provisions are where most of the deal risk sits. MSOs would be barred from owning, controlling, acquiring or financing ownership interests in a medical practice, and MSO representatives could not serve in governance or employee roles at a practice they manage.
Management contracts would be allowed only if negotiated at arm’s length through independent legal counsel and financial advisors, with compensation at fair market value as determined by the Federal Trade Commission. The Foley analysis said that requirement would “substantially constrain deal structuring and purchase prices” and reduce the appetite of both buyers and sellers.
The bill would also prohibit MSOs from exercising de facto control through ultimate decision-making authority over hiring, compensation and staffing, scheduling, revenue targets, coding, billing and pricing, payer contracting. Any agreement that violates those restrictions would be void and unenforceable.
Christopher Grubb, MD, an anesthesiologist at East Carolina Pain Consultants and East Carolina Anesthesia Associates in Greenville, N.C., told Becker’s the line between services and control is the central question.
“If Congress wants this legislation to have a meaningful impact, it will need to distinguish legitimate administrative services from arrangements that effectively transfer financial and operational control of a physician practice to outside investors,” he said.
The bill would bar providers from interfering with physicians’ clinical judgment, including by dictating patient visit times, clinical status determinations, treatment timelines, referral patterns, diagnostic terminology or the range of clinical orders available.
It would also ban noncompetes, nondisclosure agreements and nondisparagement agreements involving physicians, providers or MSOs, with limited exceptions. Noncompetes would remain enforceable only for physicians who hold at least 25% ownership in the practice.
California, Colorado, Indiana, New Hampshire, Oregon and Washington already restrict physician noncompetes to varying degrees, according to Foley.
Enforcement and penalties
The bill layers several enforcement routes:
- FTC: Violations would be treated as unfair or deceptive acts or practices under the FTC Act.
- Private lawsuits: A private right of action would allow treble damages, attorneys’ fees and equitable relief.
- State attorneys general: Attorneys generals could sue on behalf of state residents.
- Divestiture: Courts finding a violation must order the violator to cease and desist and, if applicable, divest. A divestiture order must include disgorgement of revenue received during the violation.
- Federal program exclusion: Violators could be excluded from federal healthcare programs.
The requirements would take effect one year after enactment. The bill would not preempt state laws that are equally or more restrictive, leaving platforms to comply with both.
Gary Herschman, co-chair of the healthcare transactions group at Baker Donelson in Iselin, N.J., told Becker’s that corporate practice of medicine noncompliance already carries risk at the state level, including attorney general and professional board investigations, physicians using noncompliance to void their contracts, and payers denying claims or clawing back prior reimbursement.
He urged platforms to review not only their agreements, but “whether platforms are operating consistent with such provisions (which many aren’t), and whether they are fully documenting such compliance on an ongoing basis.”
Several physician leaders told Becker’s that the exemptions 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.
Brian Cohen, MD, administrative chief of Miami Anesthesia Services, said the exemptions “seem to create a path directly toward hospital employment.” Taif Mukhdomi, MD, medical director at Pain Zero in Columbus, Ohio, said the bill’s exemptions “favor hospital acquisitions.”
Adam Rana, MD, director of the Joint Replacement Center at Maine Medical Center in Portland, said PE represents a small share of orthopedic practices and that consolidation into hospital systems is the larger trend. Any legislation, he said, “should therefore be structured so that it does not unintentionally disadvantage independent physician practices or accelerate consolidation.”
Several sources also said the bill does not address the reimbursement pressures that push independent groups toward outside capital.
“Handing control back to physicians in a market where neither input is negotiable from a position of strength is making us the captain while shutting off our engines,” Dr. Cohen said, referring to commercial rates and provider salaries.
Nicholas Schiavoni, MD, co-founder and CEO of Calder Health in Laguna Beach, Calif., said the bill raises awareness and sets a precedent but “doesn’t address the deeper issue, that many independent docs and small groups just can’t survive on their own anymore.”
The bill has been referred to committee. All sponsors are Democrats, and no Republicans have signed on. The Foley analysis said bipartisan support “does not appear likely in the current political environment.” The bill has been endorsed by the American Academy of Emergency Medicine, the ONCare Alliance and the American Economic Liberties Project, among others.
Most sources Becker’s spoke with doubted it would pass. But Todd Jones, chief strategy officer and chief ambulatory officer of Clearwater, Fla.-based BayCare Health System, said it could still “meaningfully shape future physician practice transactions.”
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