On September 16, 2026, Democratic lawmakers in the U.S. Senate and House of Representatives introduced the Stop Corporate Takeovers of Physicians Act of 2026, proposed legislation that would restrict corporate ownership and control of physician practices. If enacted, the bill would establish a federal corporate practice of medicine (CPOM) framework, significantly limit certain management services organization (MSO) agreements, restrict noncompetition and other employment provisions, and authorize federal, state, and private enforcement.
The legislation was introduced in the U.S. Senate by Senators Elizabeth Warren (D-Mass.), Ron Wyden (D-Ore.), and Jeff Merkley (D-Ore.) and in the U.S. House of Representatives by Representatives Val Hoyle (D-Ore.), Alexandria Ocasio-Cortez (D-N.Y.), and Suhas Subramanyam (D-Va.). The bill has received endorsements from medical associations and advocacy organizations, including the American Academy of Emergency Medicine, the American Economic Liberties Project, the Coalition for Patient Centered Care, OrthoForum, and the Alliance of Independent Dentists. It draws substantially from Oregon’s Senate Bill 951, which strengthened that state’s restrictions on corporate ownership and control of medical practices and created a private right of action for certain violations.
Although the bill has been framed largely as a response to private equity (PE) and insurer ownership of physician practices, its operative provisions appear to reach more broadly. Physician groups, MSOs, investors, lenders, health systems, and other healthcare organizations should evaluate the proposal’s potential implications for existing ownership, governance, financing, and management arrangements.
The proposal would represent a significant expansion of federal involvement in an area historically regulated primarily at the state level, with potential implications for physician practice ownership, MSO structures, healthcare transactions, and existing management arrangements.
Corporate Practice of Medicine Laws and the Rise of MSO Structures
The corporate practice of medicine doctrine generally prohibits corporations and other non-physician entities from practicing medicine, employing physicians to provide medical services, or exercising control over medical decision-making. CPOM regulation has historically occurred primarily at the state level, with over 30 states maintaining some form of prohibition, though the scope and stringency of these restrictions vary widely. Many states also maintain fee-splitting prohibitions that restrict non-physicians from sharing in professional fees.
Despite these restrictions, corporate structures have developed to facilitate investment in physician practices. The most common is the management services organization (MSO) model, under which a non-physician entity provides administrative and management services to a physician practice in exchange for a fee, while the practice remains physician owned. According to the bill’s sponsors, more than 80 percent of U.S. doctors are now employed by corporate entities, up from 62 percent in 2019, which the sponsors describe as evidence that existing state protections contain gaps allowing circumvention of CPOM restrictions.
Proponents of private equity and corporate investment argue that outside capital can provide benefits, including operational efficiencies, relief from non-clinical burdens, expanded access to care, and economies of scale. The bill’s sponsors counter that corporate ownership can prioritize financial returns over patient care and that certain MSO structures allow non-clinical entities to exercise de facto control over clinical and operational decision-making.
Restrictions on Corporate Ownership, Control, and MSO Arrangements
Ownership and Control Prohibitions.
At the center of the legislation is a prohibition on certain forms of corporate ownership and control of medical practices. Unless an exception applies, a partnership or corporate entity that is not majority-owned and controlled by licensed clinicians would not be permitted to own or control a medical practice, employ or contract for the professional services of a licensed clinician, or otherwise engage in the practice of medicine. Majority control requires both majority ownership by licensed clinicians and clinician control of a majority of the governing body. By requiring both majority ownership and majority representation on the governing body, the bill addresses both equity ownership and governance authority.. Exceptions apply to certain nonprofit and public healthcare providers, hospitals, hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals.
MSO Restrictions.
The legislation directly regulates arrangements between physician practices and MSOs, including structures sometimes described as “friendly physician” or “captive physician” arrangements. Among other restrictions, an MSO generally would not be permitted to:
- Own or control shares or another ownership interest in a medical practice;
- Finance the acquisition of such an interest;
- Control or restrict the sale or transfer of practice interests or assets;
- Participate in the management of the practice; or
- Exercise ultimate decision-making authority over specified clinical, financial, and operational matters.
Protected areas include decisions concerning clinician hiring and termination, staffing, work schedules and compensation, clinical policies, billing and coding, pricing, payor contracting, and certain revenue and financial decisions. The legislation also requires MSO agreements to be negotiated at arm’s length with legal counsel, negotiators, and financial advisors independently selected by the medical practice and free from financial conflicts of interest with the MSO, and imposes fair-market-value requirements on MSO compensation. These provisions are notable because they address not only formal ownership, but also the degree of operational and financial control exercised through management agreements.
Physician Ownership and Employment Protections
The bill seeks to ensure that clinician ownership represents meaningful participation rather than nominal ownership. Clinician owners generally would need to be licensed and present in a state where the practice provides services and substantially engaged in providing medical care. This “active practice” requirement is noteworthy and could have implications for passive physician ownership arrangements.
The legislation would also eliminate certain restrictive covenants in clinician employment agreements. It would generally prohibit noncompete agreements, with an exception where a clinician owns at least 25 percent of the practice. Covered nondisclosure and nondisparagement provisions would also generally be void and unenforceable, subject to specified limitations.
Federal Enforcement and Interaction with State CPOM Laws
The bill’s enforcement provisions include Federal Trade Commission (FTC) enforcement authority, a private right of action for individuals harmed by violations (with treble damages and attorneys’ fees), and enforcement by state attorneys general. Courts may order cessation of prohibited conduct, divestiture, and disgorgement of revenue, and the legislation would amend the Social Security Act to allow exclusion from federal healthcare programs for violating entities.
The bill expressly preserves state laws that impose equal or stronger requirements, establishing a federal floor while permitting states to maintain more restrictive requirements. This represents a significant development because regulation of the practice of medicine has historically occurred exclusively at the state level; the federal legislation is modeled significantly on Oregon’s SB 951.
With limited legislative time remaining before the November midterm elections and Democratic-only sponsorship, the bill may face challenges advancing during the current Congress. However, broader congressional scrutiny of healthcare ownership and consolidation has crossed party lines, and the bill’s detailed provisions could influence future federal or state legislative efforts regardless of its near-term prospects.
What Healthcare Stakeholders Should Know About the Proposed CPOM Legislation
Although the bill is only a proposal at this stage, healthcare stakeholders should monitor several developments:
- Whether the legislation advances in its current form or whether is provisions are incorporated into broader healthcare consolidation proposals;
- State-level CPOM reform efforts that may look to this legislation and Oregon’s SB 951 as models;
- The broader debate about the federal government assuming a direct role in regulating physician practice ownership and MSOs for the first time in over a century;
- How these proposed restrictions could affect existing structures and future transactions if enacted federally or replicated in additional states;
- The bill’s multi-layered enforcement framework, which signals a potential shift toward more aggressive enforcement of CPOM-related restrictions.
Physician practices, MSOs, investors, health systems, lenders, and other healthcare organizations should continue monitoring the legislation and related state initiatives, particularly where existing arrangements involve non-clinical ownership interests, management rights, restrictive covenants, or contractual provisions that may give an MSO or other entity significant control over a medical practice.
How Frier Levitt Can Help
Frier Levitt advises physician practices, MSOs, investors, health systems, and other healthcare organizations on corporate practice of medicine requirements, ownership and management structures, and healthcare transactions. As federal and state scrutiny of physician practice ownership continues to evolve, organizations should assess whether existing or proposed arrangements could be affected by changing requirements. Contact Frier Levitt to discuss how these developments may impact your organization, transactions, or management arrangements.
