Independent practices are rapidly disappearing as hospitals and corporate entities accelerate acquisitions across the U.S.
Between 2019 and 2023, the share of independent physician practices owned by hospitals, health systems or other corporate entities jumped from 39% to 59%. Over the same period, physician employment by these entities rose from 62% to 78%, according to a December 2025 report from the Progressive Policy Institute.
As a result, several states have recently passed legislation to place more restrictions and regulations on healthcare mergers and acquisitions, especially those involving corporate entities, private equity and management services organizations.
In June 2025, Oregon Gov. Tina Kotek signed a bill enacting the strictest regulatory regulations on corporate entities in healthcare in the nation. Broadly speaking, the law seeks to redefine the list of entities allowed to engage in the practice of medicine and medical decision-making, either directly or indirectly through management services agreements.
The law provides a three-year window for facilities to comply with the new rules. It mandates that physicians hold at least a 51% stake in most medical practices, while excluding corporations and management service organizations from decision-making control of practices.
The law also bans noncompete agreements that prohibit physicians from moving to facilities in the surrounding area.
“What we tried to do in Oregon … is to be clear that the corporate practice of medicine doctrine means something more and we expect physicians to be in charge,” House majority leader Ben Bowman told the American Medical Association about the law. “It doesn’t mean you can’t partner with private equity firms or corporations, but it means at the end of the day when decisions are being made that impact patients, they have to be made by the physicians.”
The bill and heightened scrutiny over M&A come on the heels of numerous closures, physician departures and patient care issues at corporate-owned practices in Oregon. In July 29, several physicians left their roles at the Eugene-based Oregon Medical Group, a practice acquired by Optum in 2020. Since the acquisition, patients reportedly received notifications that their physicians are leaving, whether it be for retirement, personal reasons or without explanation. Previously, on July 14, 2025, the group announced the departure of several OB-GYNs.
More recently, Colorado’s state legislature introduced a bill that would dramatically expand state oversight of healthcare deals, creating a new, standalone review and notification authority. This authority will also review transactions that don’t trigger federal antitrust review.
Under the bill, the Colorado attorney general would be explicitly authorized to prohibit deals or delay closings if a transaction may reduce competition, create a monopoly or otherwise harm consumer welfare. It would apply to a broad set of “healthcare entities,” including hospitals, ASCs, behavioral health providers, urgent care centers and PBMs, among others.
The bill introduces “material change transactions,” defined broadly to include ownership changes, control changes, consolidation or arrangements that allow joint negotiation with payers, not just outright acquisitions.
However, a recent research brief by the Pacific Search Institute indicates that states’ efforts to tighten corporate practice of medicine may unintentionally undermine independent practices by making it more difficult for them to compete with hospitals.
The brief argues that states concerned about consolidation have moved to expand or more aggressively enforce CPOM bans in ways that restrict or discourage MSO-practice partnerships.
“These bans do the opposite of what they purport to do, ironically encouraging greater healthcare consolidation,” Wayne Winegarden, MD, author of the issue brief and director of the Center for Medical Economics and Innovation at the Pacific Research Institute, said in a Feb. 11 news release. “They almost exclusively attack independent physicians and put them at a competitive disadvantage relative to hospitals. The result is less competition among providers — and higher prices for patients.”
According to the brief, 33 states limit corporate ownership of medical practices to varying degrees. But the researchers argue that these rules often target independent practices while hospitals are typically exempt, even though hospital-employed physicians may face some of the same incentive concerns CPOM laws are intended to address.
