Key Takeaways
- Democratic members of the Senate and House introduced the Stop Corporate Takeovers of Physicians Act, a bill that would establish a federal prohibition on corporate ownership and control of medical practices — an area of regulation traditionally governed exclusively by state law.
- The bill would restrict MSO activities, prohibit noncompete and nondisclosure agreements for clinicians, require physician owners to be actively engaged in clinical practice and limit MSO branding and share transfer authority.
- If enacted, the legislation would significantly affect private equity investments in physician practices, existing MSO/PC arrangements, multistate telehealth platforms and M&A transactions across the healthcare industry.
- Near-term enactment is unlikely given the lack of Republican support, but the bill’s detailed provisions could serve as a template for state legislatures considering stronger CPOM restrictions.
On Sept. 16, 2026, a bicameral group of Democratic lawmakers introduced the Stop Corporate Takeovers of Physicians Act, a proposed federal bill that would establish a nationwide prohibition on corporate ownership and control of medical practices. The bill was introduced in the Senate by Sens. Elizabeth Warren, Ron Wyden and Jeff Merkley; and in the House by Reps. Val Hoyle, Alexandria Ocasio-Cortez and Suhas Subramanyam.
The legislation is modeled on Oregon Senate Bill 951 (2025), which has already been cited in litigation challenging corporate affiliations with physician groups. Proponents of the legislation contend that corporate involvement has undermined physician autonomy and increased costs. Others in the industry, however, argue that private equity and corporate investment have provided essential capital to physician practices facing reimbursement pressures, administrative burdens and workforce shortages, enabling practices to remain operational and expand access to care in underserved communities.
If enacted, the bill would have far-reaching consequences across the healthcare industry. It would fundamentally alter investments in physician practice management, requiring evaluation and modification of many existing management services organization (MSO)/professional corporation (PC) arrangements, posing particular challenges for multistate telehealth platforms and introducing new considerations for M&A transactions, healthcare lending and debt markets.
Corporate practice of medicine (CPOM) regulation has historically been an exclusively state-level matter, and it is far from clear that a federal prohibition on corporate ownership of medical practices falls within Congress’ constitutional authority. The bill’s attempt to establish a nationwide framework in this area represents a major structural shift in the regulatory landscape and raises significant federalism concerns. The bill expressly preserves state laws that impose equal or stronger requirements, establishing a federal floor rather than a ceiling. States would remain free to maintain or adopt more restrictive CPOM requirements but would not have the ability to opt out notwithstanding the individual state policy.
Key Provisions
1. Corporate Ownership Prohibition. The bill would make it unlawful for any partnership or corporate entity that is not majority-owned and controlled by one or more licensees to own or control a medical practice, employ a licensee, or engage in the practice of medicine. To qualify as a permissible clinician-owned entity, licensees must hold a majority ownership interest and constitute a majority of the entity’s governing body. Exceptions are provided for certain nonprofit and public healthcare providers, hospitals and hospital-affiliated clinics, critical access hospitals, and rural emergency hospitals.
2. Scope. The bill defines “licensee” by reference to the Social Security Act. A “licensee” means a physician (M.D. or D.O.) or an 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. In practice, this means a provider must hold a valid, active license in the jurisdiction where the provider practices. This definition is modeled on Oregon SB 951’s concept of “medical licensee,” which similarly encompasses physicians, physician assistants and nurse practitioners licensed in the state.
The bill’s scope does not extend to dentists, optometrists, chiropractors, podiatrists, psychologists or other healthcare professionals subject to separate state corporate practice restrictions. As a result, corporate ownership and MSO structures involving dental service organizations (DSOs), optometry practices or other nonphysician specialties would not be directly affected by this legislation, though such arrangements may remain subject to existing state-level restrictions.
3. MSO Restrictions. The bill would impose detailed restrictions on MSOs, enumerating specific prohibited activities with respect to licensees and the practices that employ them. An MSO may not own or control ownership interests in a medical practice; serve as a director, manager or officer of a practice; acquire or finance the acquisition of practice ownership interests; or exercise de facto control over a practice’s administrative, business or clinical operations in a manner that affects the nature or quality of medical care. The bill also specifies protected areas over which an MSO may not exercise ultimate decision-making authority:
- Hiring, firing, staffing levels and work schedules
- Physician compensation and clinical policies
- Billing and coding practices
- Pricing, payer contracting and revenue decisions
An MSO may not enter into a management services agreement with a medical practice unless the practice negotiated the agreement at arm’s length through independently selected advisers and the MSO’s compensation reflects fair market value.
4. Active Practice Requirement. Physician owners of a medical practice must be licensed and present in the state where the practice furnishes patient services and must be “substantially engaged” in providing medical care. This “active practice” requirement is stricter than most current state laws and could affect ownership arrangements in which physician-owners are not directly involved in day-to-day clinical operations.
5. Branding Prohibition. The bill would prohibit a MSO from advertising a medical practice’s services under any name other than the practice’s own name.
6. Share Transfer Restriction Ban. The bill would also prohibit an MSO from controlling or restricting the sale or transfer of a medical practice’s shares, interests or assets.
7. Restrictive Covenant Prohibitions. The bill would void and render unenforceable noncompete agreements between a licensee and any healthcare provider or MSO, with a narrow exception for clinicians owning at least 25% of the practice. Nondisclosure and nondisparagement agreements within the bill’s scope would likewise be void and unenforceable. The bill preserves common-law tort claims such as libel, slander and tortious interference.
Next Steps
The bill faces significant headwinds in the current Congress. All sponsors are Democrats, and no Republican sponsors have signed on. With both chambers under Republican control, near-term enactment is unlikely. Nevertheless, the bill’s bicameral introduction is a policy marker, signaling the direction in which at least some federal lawmakers intend to push on corporate involvement in medical practice ownership. The bill’s detailed provisions also provide state legislatures with a ready-made template. Oregon, California, Massachusetts and other states have already strengthened their CPOM laws or stepped up enforcement in 2025 and 2026, and the federal bill’s specific prohibitions could accelerate that trend in upcoming state legislative sessions.
McGuireWoods is actively monitoring this legislation and related state-level developments and can assist in tracking and assessing the impact of these evolving regulatory efforts. For questions about how these changes affect your management arrangements, M&A transactions or regulatory compliance strategy, contact the authors, your McGuireWoods contact, or a member of the Healthcare Compliance, Regulatory & Policy Practice Group.