It’s safe to assume that every city has an ordinance against parking in a no parking zone. Then somebody actually looks at what’s idling against the red curb or in front of a “No Parking” sign every single day, for hours at a stretch, engine running. It’s an ambulance, which is exempt by law, or an overnight delivery truck, which is exempt in practice. That’s not an oversight, that’s the design, and it tells you something about who the ordinance was actually written to stop: you.
On September 16, a bipartisan group of United States Senators introduced the Stop Corporate Takeovers of Physicians Act. The Act would bar private equity firms, insurance companies, and other for-profit corporations from owning or controlling medical practices, and it takes direct aim at the “friendly physician” loophole: the structure in which a management services organization runs hiring, firing, compensation, billing, and clinical protocol while a nominal physician owner holds the license on paper. Violators would face FTC and state Attorney General enforcement, plus private lawsuits with treble damages.
Viewed correctly, this isn’t an isolated bit of legislation. It’s part of a much larger trend. Oregon passed the first-in-the-nation version of this law in 2025, and Washington, Vermont, Maine, and New Mexico all introduced similar legislation this year. California adopted a somewhat similar, but not exact, prohibition, as well. California’s Attorney General recently extracted a $4.5 million settlement from Carbon Health, unwinding its MSO structure over features this federal Act targets. A separate federal Act, the Break Up Big Medicine Act, began a run at common ownership of health plans and providers back in February.
Whether or not the Stop Corporate Takeovers of Physicians Act clears the Senate Judiciary Committee, the direction is set. More states with corporate-practice-of-medicine statutes on the books are going to write their own version of this.
But read all of the existing state laws closely and you’ll notice they share a defect. Every one of them is aimed at for-profit control: private equity funds, insurance companies, and MSOs with shareholders. None of them touches a nonprofit exercising identical control, in other words, the same authority over hiring, firing, compensation formulas, and clinical protocols.
A nonprofit health system doesn’t need to extract a return for investors to be just as controlling as a PE-backed MSO. Arguably it has more room to be, since it isn’t answering to anyone measuring the relationship by their return on investment, and it gets to do it tax free.
The same is true in substance of the Stop Corporate Takeovers of Physicians Act, which is written to attack for-profit ownership and says nothing about a nonprofit health system dictating a hospital-based group’s scheduling, compensation methodology, and EHR-embedded clinical protocols.
Picture two anesthesiology groups experiencing identical operational control. One is subject to a management agreement with a PE-backed MSO, now squarely in the crosshairs of the proposed new law. The other reports to a nonprofit hospital system exerting the same day-to-day control. Only one of them is on target list.
Some Timely Takeaways for You
1. If your group is being courted or squeezed by a nonprofit system, don’t expect this legislative wave to constrain its conduct. The statute isn’t going to do that work for you. Your contract has to.
2. Track your state’s corporate-practice-of-medicine activity, and read the exemptions before you read the prohibitions. Oregon’s carve-out for hospitals is the template. Assume your state’s version includes something similar until you’ve confirmed otherwise.
3. Don’t assume nonprofit status means benign intent. A nonprofit system with no shareholders to satisfy has just as much reason to consolidate control over your group’s operations as a PE-backed platform does, sometimes more, since there’s no investor discipline pushing back.
4. Expect this asymmetry to become its own fight. A law that polices for-profit control while giving nonprofits a pass is an obvious target for further restrictions and related lobbying.
If you’d like to talk through what these laws do and don’t reach in your group’s arrangements, let me know.
