The military has a term for it when your own side’s shells land on your position: friendly fire.
In September, a group of senators and representatives introduced the Stop Corporate Takeovers of Physicians Act of 2026. All of the press coverage I’ve seen took the Act at its word, reporting that it’s a proposed law to get private equity, insurers and other corporations out of the business of owning medical practices.
That much is true, but when you read past the press coverage, you’ll find that some of the Act’s most aggressive provisions aren’t aimed at private equity at all. They’re aimed at anyone who delivers care, and that picks up your physician-owned medical group.
What the Act Says
The Act was introduced in identical form in the Senate (S. 5419) and the House (H.R. 10444) on September 16. Its headline provision bars any entity that isn’t majority-owned and controlled by physicians and other licensed clinicians from owning or controlling a medical practice. So far, so good.
Then comes Section 2(b). It makes it unlawful for “any licensee, health care provider, or management services organization” to enter into a noncompete, a nondisclosure agreement or a nondisparagement agreement. Any such agreement is “void and unenforceable.”
And who’s a “health care provider”? “Any entity that delivers health care services.” The Act says expressly that the term includes a medical practice, which it defines as a professional corporation, LLC or partnership organized to practice medicine.
In other words, you.
The 25 Percent Problem
There’s one exception. A noncompete between a medical practice and one of its physicians survives only if that physician owns 25 percent or more of the practice.
Do the math. A group with four equal owners squeaks by. But when you add a fifth, nobody qualifies. In a 40-physician group of equal partners, each owns 2.5 percent, and not one partner’s noncompete would be enforceable. Void, every one.
Thinking about a clever forfeiture clause instead? The Act defines a noncompete to include any term that “penalizes” a departing worker or “functions to prevent” him or her from competing, written or oral. The drafters saw that one coming.
The nondisclosure ban is even broader. It has no ownership exception at all, not for your employed physicians, not for your 2.5 percent partners, not even for a 30 percent owner. The confidentiality agreement that keeps a departing partner from walking out with your payer rates and productivity data? Void. You’d be left relying on trade secret law.
It Gets Worse
Section 2(b) also says a health care provider may not “interfere with, control, or otherwise direct the professional judgment or clinical decisions” of a physician. The examples include specifying how long a physician may spend with a patient, specifying how quickly a treatment should begin, having final say over diagnosis codes, and configuring the medical record in a way that limits the clinical orders available. The FTC gets to add to the list.
I understand the target that the Act’s sponsors have in mind. Picture it as a PE-backed MSO pushing 11-minute visits. But your group’s visit templates, your coding compliance review, your department’s standardized protocols? On the face of the Act, they’re fair game.
Enforcement comes from the FTC, state attorneys general and private lawsuits with treble damages and attorneys’ fees, plus a jury trial on request. Plaintiffs’ lawyers are likely salivating.
Keep It in Perspective
This is proposed legislation, not a law. It has been referred to committee and who knows what will happen.
But even if the Act dies along the legislative track, that doesn’t mean that you can completely relax. The Act is modeled on Oregon’s 2025 corporate practice of medicine law, and state legislatures copy each other’s homework. The next version may show up in your state capitol, without even the exceptions this one has.
That’s the real lesson. When legislators set out to rein in Wall Street, the drafting is aimed at a business model, and the language often catches everyone. Physician-owned groups end up as collateral damage, not because anyone meant to hit them, but because nobody bothered to check where the shells would land.
Some Timely Takeaways for You
- Run the 25 percent test now. Inventory every restrictive covenant your group relies on, owner by owner and employee by employee, and see what would survive.
- Build retention that doesn’t depend on a covenant. Ownership tracks, buy-in value and compensation that reward staying hold up when noncompetes don’t. Just make sure the economics reward staying rather than penalize leaving. The drafters thought of that, too.
- Treat confidentiality as a system, not a signature. If your physicians’ nondisclosure covenants are off the table, access controls, data discipline and trade secret practices are what’s left.
- Speak up. Your specialty society and state medical association should be hearing from physician-owned groups that a law meant to protect physicians would strip their groups’ protections. That’s a fixable drafting problem, but only if someone points it out.
Friendly fire is still fire.
If you’d like to talk through what this would mean for your group, let me know.
