Stop Corporate Takeovers of Physicians Act: A Possible Shift in Healthcare Private Equity

On September 16, 2026, Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.), along with Representatives Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), and Suhas Subramanyam (D-Va.), introduced the Stop Corporate Takeovers of Physicians Act, proposed federal legislation that would significantly restrict common management services organization (MSO) and “friendly physician” structures used in physician practice arrangements.

According to a press release issued by Representative Ocasio-Cortez, the proposed legislation would:

• Ban the corporate practice of medicine by making it illegal for private equity funds, insurance companies, and other for-profit corporations to own or control medical practices.
• Close the “friendly physician” loophole that has allowed investor-backed corporations to evade state-level bans on the corporate practice of medicine and control medical practices through management services organizations (MSOs);
• Prohibit an MSO from controlling a medical practice through a “friendly” or “captive” physician, or by exercising de facto control over business, administrative, or clinical functions, including hiring and firing, work schedules, compensation, revenue disbursement or targets, billing practices, contracting, and other services;
• Ensure that physicians retain ultimate control of medical practices by requiring that physician owners are meaningfully engaged in providing medical care in the state in which their practice is located; and
• Protect physician independence by prohibiting corporate interference with clinical decisions and banning restrictive contract terms, such as non-compete agreements, nondisclosure agreements, and non-disparagement agreements.[1]

For MSO clients, the bill is notable because it targets not only formal ownership of physician practices, but also contractual and operational indicia of control that are central to many MSO arrangements. In announcing the legislation, the bill sponsors stated that “management services organizations (MSOs) have become vehicles for exercising corporate control over physicians.” According to the lawmakers, although MSOs are often retained to perform administrative functions, investor-backed entities frequently assume control over clinical operations, staffing decisions, and billing and coding practices, creating pressure on physicians with respect to patient-care decisions.[2]

The bill is modeled largely on Oregon’s SB 951, described by its proponents as a “first-in-the-nation” law designed to limit corporate influence over medical practices.[1] Signed into law in May 2025, Oregon’s law has already been described as the country’s most aggressive limit on private equity involvement in medical practice management.[2]

The federal proposal also fits within a broader state-level trend. Following SB 951’s enactment, California and Vermont adopted legislation strengthening or codifying corporate practice of medicine restrictions. Other states, including Massachusetts, Indiana, and Connecticut, have recently enacted measures increasing regulatory oversight of private-equity investment and healthcare transactions.

Notably, the federal bill contains several significant exemptions. Nonprofit healthcare providers, hospitals and hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals are excluded from many of the proposed restrictions. [1] These exemptions would likely leave large health systems mostly unaffected while investor-owned physician practice groups face the most significant impacts.

The proposed legislation would require clinician oversight of key medical practice administrative functions, including staffing, billing, and payer contracting. The bill would also prohibit physician noncompete and nondisclosure agreements. Violations would constitute unfair or deceptive acts or practices under the FTC Act, and violators could face exclusion from participation in federal healthcare programs, including Medicare and Medicaid.

The federal bill has gained the backing of several medical associations and advocacy groups, including the American Academy of Emergency Medicine, American Economic Liberties Project (AELP), Coalition for Patient Centered Care, Bull Moose Project, Center for Health and Democracy, OrthoForum, Alliance of Independent Dentists, Private Equity Stakeholder Project, and the Association for Independent Medicine.[2]

In its current form, the Stop Corporate Takeovers of Physicians Act would represent one of the most significant federal interventions into healthcare private-equity investment to date and would directly challenge the conventional private equity/MSO model. Although the bill’s prospects remain uncertain, MSO clients should consider reviewing management agreements, governance rights, equity-transfer restrictions, provider employment arrangements, billing and coding oversight, and payer-contracting authority for provisions that could be characterized as conferring operational or clinical control. We will continue to monitor the bill’s progress and evaluate its potential implications.

[1] https://www.warren.senate.gov/wp-content/uploads/2026/09/Stop-Corporate-Takeovers-of-Physicians-Act-for-circ.-2026.pdf

[2] Id.