Proposed Federal Bill Would Restrict Private Equity Ownership of Physician Practices

Proposed Federal Bill Would Restrict Private Equity Ownership of Physician Practices - Healthcare Law Update - November 2026
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Date Published: 11/1/2026

On September 16, 2026, a group of House and Senate lawmakers introduced the “Stop Corporate Takeovers of Physicians Act of 2026” (S. 5419 / H.R. 10444), which would significantly restrict corporate ownership and control of physician practices. If adopted, the legislation would generally prohibit entities that are not majority-owned and controlled by licensed clinicians from owning or controlling medical practices, employing clinicians or contracting for their professional services, subject to specified exceptions for nonprofit and public healthcare providers and certain hospitals. The bill would also substantially limit the role of management services organizations (MSOs), prohibiting them from owning or financing the acquisition of practice ownership interests, controlling practice sales, receiving dividends from practice ownership, or exercising direct or indirect control over key operational decisions, including hiring, compensation, staffing, revenue disbursement, revenue targets, coding, billing, pricing and payor contracting. Management services agreements would be permitted only if independently negotiated by the practice at arm’s length and priced at fair market value. If enacted, these restrictions could fundamentally alter the traditional private equity-backed physician practice model and require significant restructuring of existing MSO arrangements.

The legislation would also strengthen protections for clinicians by prohibiting non-healthcare providers from interfering with clinical judgment, including decisions concerning patient treatment, admission, discharge, referrals, and diagnosis coding. In addition, the legislation would generally render noncompete, nondisclosure and non-disparagement agreements with clinicians void and unenforceable. Noncompetes may remain enforceable if the clinician owns at least 25% of the practice. The legislation remains at the introductory stage, and its ultimate prospects are uncertain. Nevertheless, physician practices, healthcare organizations, and investors should monitor its progress and consider its potential implications when evaluating ownership structures, management agreements, employment arrangements, and prospective transactions.

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FOR MORE INFORMATION, CONTACT:
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
Edward Hilzenrath, HLU Editor | 973.403.3114 | ehilzenrath@bracheichler.com
Paul J. DeMartino, Jr. | 973.364.5228 | pdemartino@bracheichler.com

*This is intended to provide general information, not legal advice. Please contact the authors if you need specific advice.

Related Practices:   Healthcare Law

Related Industry:   Healthcare