On September 16, 2026, a group of Democratic lawmakers introduced the Stop Corporate Takeovers of Physicians Act, legislation that would establish the first federal prohibition on the corporate ownership and control of physician practices. If enacted, the bill would represent a significant departure from the longstanding approach to corporate practice of medicine (“CPOM”) regulation, which historically has been regulated almost exclusively by the states.
Although the legislation faces substantial political and legal obstacles, the proposal is nevertheless noteworthy. The bill reflects growing concern among certain policymakers regarding the role of private equity firms, for-profit management companies, and other investors in healthcare delivery, and arrives at a time when states are increasingly scrutinizing healthcare ownership structures, management arrangements, and investor influence over provider organizations.
Even if the legislation does not advance, it may influence future state legislative efforts, and it provides insight into the direction of ongoing policy debates regarding physician practice ownership and management.
Overview of the proposed legislation
The legislation was introduced by Senators Elizabeth Warren, Ron Wyden, and Jeff Merkley, along with Representatives Val Hoyle, Alexandria Ocasio-Cortez, and Suhas Subramanyam. According to its sponsors, the bill is intended to preserve physician independence and reduce corporate influence over the delivery of healthcare services.
The proposal is modeled in significant part on Oregon's recent CPOM reforms, including SB 951, which imposed some of the nation's most restrictive limitations on relationships between physician-owned entities and management services organizations (MSOs).
If enacted, the legislation would substantially affect private equity-backed physician practice platforms, MSO-professional entity structures often referred to as “Captive PC” or “Friendly PC” arrangements, physician practice management organizations, multistate provider groups, and a broad range of healthcare transactions.
Key provisions
Federal Prohibition on Corporate Ownership and Control
The bill would prohibit entities that are not majority-owned and controlled by a licensee (defined as a physician or other advanced practice provider such as a physician assistant or nurse practitioner who is authorized under state law to diagnose and treat patients in a clinical setting) from owning or controlling physician practices, employing covered clinicians, or engaging in the practice of medicine. To qualify as a permissible licensee-owned entity, one or more licensees would be required to hold a majority ownership interest and constitute a majority of the entity's governing body. Nonprofit providers and certain hospitals, hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals would be exempt.
Expanded restrictions on MSOs
The legislation would impose significant restrictions on the authority of MSOs and similar management organizations.
Among other things, an MSO could not:
- Own or control equity interests in a physician practice;
- Serve as a director, manager, or officer of a physician practice;
- Acquire or finance the acquisition of physician ownership interests; or
- Exercise de facto control over administrative, business, or clinical operations in a manner affecting patient care.
The bill also identifies several categories of decisions over which an MSO could not exercise ultimate authority, including clinician compensation, staffing, clinical policies, billing and coding practices, pricing decisions, payer contracting, and revenue-related matters.
Management services agreements would be required to be negotiated at arm’s length through independently selected advisers and to provide compensation consistent with fair market value principles.
Active practice requirement
The legislation would require the licensee-owners of a physician practice to be actively licensed, present in the state where services are provided, and substantially engaged in the provision of medical care through the practice they own (in whole or in part). This requirement is more restrictive than many existing state CPOM doctrines and could affect structures that rely upon physician owners who play limited operational or clinical roles.
Additional restrictions
The bill would further prohibit certain branding arrangements, limit restrictions on ownership transfers, and render many noncompete, nondisclosure, and non-disparagement provisions unenforceable.
Federal administration and enforcement
The bill would place principal federal implementation and enforcement authority with the Federal Trade Commission (FTC). Violations would be treated as unfair or deceptive acts or practices under the Federal Trade Commission Act, and the FTC would be authorized to issue implementing regulations. The selection of the FTC is noteworthy because the bill regulates not only clinical independence but also corporate ownership, governance, management authority, contracting, and economic control.
Separately, the proposal would amend the Social Security Act to permit the Secretary of the U.S. Department of Health and Human Services to exclude entities that violate the Stop Corporate Takeovers of Physicians Act from federal healthcare programs.
Notably, the proposal would not rely solely on governmental enforcement. The bill would establish a private right of action under which injured persons could pursue treble damages, attorneys' fees, litigation costs, and equitable relief, potentially increasing litigation risk for healthcare organizations, investors, MSOs, and other entities involved in physician practice ownership and management arrangements.
Federal floor, not federal ceiling
Importantly, the legislation would not replace existing state CPOM regimes. Instead, it would establish a federal baseline while expressly preserving state laws that impose equal or greater restrictions. As a result, healthcare organizations would likely continue to operate under a layered regulatory structure in which both federal and state requirements apply. In many cases, organizations would effectively need to structure arrangements to satisfy whichever federal or state requirements are more restrictive.
Accordingly, enactment of the bill could increase regulatory complexity rather than simplify it. Organizations already navigating a patchwork of state CPOM doctrines may find themselves subject to an additional nationwide framework governing ownership, governance, and management arrangements.
Uncertainty regarding existing MSO structures
One important unanswered question is how the legislation would affect existing MSO-professional entity arrangements that were lawfully established under current state law. The bill does not address whether existing structures would be grandfathered, whether parties would receive a transition period to restructure existing arrangements, or whether certain contractual provisions would become unenforceable immediately upon enactment.
This issue is particularly significant given the widespread use of MSO-professional entity structures throughout the healthcare industry. Physician practice management platforms, specialty physician groups, health systems, and private equity-backed healthcare organizations frequently rely on arrangements designed to comply with state CPOM doctrines while allowing non-clinical entities to provide management, administrative, financial, and operational support.
Absent meaningful grandfathering protections, the legislation could require healthcare organizations to revisit numerous aspects of existing arrangements, including management services agreements, governance and reserved-power provisions, equity transfer restrictions, succession arrangements, financing structures, branding arrangements, and restrictive covenant provisions. It will be important to monitor how this bill evolves through the legislative process to determine how it would treat these existing arrangements.
Potential constitutional and federalism challenges
The proposal also raises noteworthy constitutional questions. CPOM regulation has historically been a matter of state law. State CPOM doctrines generally derive from state licensing statutes and reflect states' traditional authority to regulate the professionals they license and to determine the conditions under which medical services may be provided within their borders. Opponents of the legislation may argue that physician licensure and physician practice regulation are core areas of state police power and that Congress is attempting to federalize a subject historically reserved to the states.
Supporters of the legislation would likely rely on Congress's authority under the Commerce Clause, arguing that physician practice ownership, healthcare acquisitions, private equity investment, MSO arrangements, telehealth platforms, and multistate provider organizations all affect interstate commerce.
Increasing state scrutiny of healthcare ownership and Control
The proposal should also be viewed in the context of broader state regulatory developments. Over the last several years, states have steadily expanded oversight of healthcare ownership structures, physician practice acquisitions, management arrangements, and private equity investment. Several states have moved beyond traditional CPOM concepts and now focus more directly on investor influence, governance rights, operational control, and financial arrangements.
Recent examples include:
- Oregon’s adoption of SB 951, which significantly tightened restrictions on MSO-professional entity arrangements and addressed “de facto control” concerns.
- California’s expansion of healthcare transaction review requirements involving private equity firms, hedge funds, and MSOs.
- Massachusetts’ expansion of healthcare transaction review requirements to encompass a broader range of investor-backed healthcare transactions.
Interaction with state healthcare transaction review laws
The proposed federal legislation reflects many of the same concerns driving the expansion of state healthcare transaction review laws. Historically, CPOM laws focused on preserving physician independence, while healthcare transaction review statutes focused primarily on consolidation, competition, and improper “economic” ownership of medical practices by management entities. Increasingly, however, both frameworks are converging around broader questions concerning ownership, governance, investor influence, and operational control.
Practical implications
Taken together, the growth of state transaction review laws and the introduction of this federal legislation suggest that regulators are increasingly focused on who controls, and beneficially owns, healthcare providers and how that control is exercised. Healthcare organizations should therefore expect continued scrutiny of governance rights, management agreements, economic arrangements, ownership structures, and other mechanisms that allocate decision-making authority between licensed clinicians and non-clinical stakeholders.
Organizations involved in mergers, acquisitions, investments, affiliations, and recapitalizations may also face increasing overlap between CPOM compliance analysis and healthcare transaction review requirements, requiring earlier assessment of governance, control, and economic rights.
Likelihood of enactment
At present, the bill appears unlikely to become law in the near term. All current sponsors are Democrats, the legislation presently lacks Republican sponsorship, and Republicans currently control both chambers of Congress. The proposal is therefore best viewed, at least for now, as a statement of policy priorities rather than legislation with a clear path to enactment. That said, the proposal should not be dismissed as merely symbolic. The legislation provides a detailed blueprint that state lawmakers could use when considering future CPOM reforms and may influence ongoing policy discussions regarding healthcare ownership and private investment.
Key takeaways
For healthcare investors, physician practice platforms, MSOs, health systems, and provider organizations, the proposal serves as another indication that ownership structures, governance arrangements, and management relationships remain under increasing regulatory scrutiny.
Organizations should consider:
- Reviewing existing MSO-professional entity arrangements and governance structures;
- Evaluating management agreements and reserved-power provisions;
- Monitoring developments regarding grandfathering, transition, and implementation provisions;
- Integrating state healthcare transaction review analysis with traditional CPOM analysis; and
- Continuing to monitor state legislative developments, which are likely to present the most immediate regulatory challenges regardless of whether the federal legislation advances.
Conclusion
Although enactment of the Stop Corporate Takeovers of Physicians Act appears unlikely in the current Congress, the proposal is nevertheless significant. It reflects a growing policy focus on healthcare ownership, governance, and investor influence, and reinforces trends already visible in both state CPOM reforms and healthcare transaction review programs. Whether through federal legislation, expanded state CPOM requirements, or evolving healthcare transaction review laws, regulators are increasingly asking the same fundamental question: who controls the delivery of healthcare services, and how should that control be regulated? For healthcare organizations operating in this environment, those questions are likely to remain central to regulatory and transactional planning for the foreseeable future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]