A Dozen States Are Cracking Down on Private Equity in Healthcare. Here's Why DPC Doctors Should Pay Attention.

Legislation by DPC Insider
#private equity#physician autonomy#California#Oregon#healthcare regulation#corporate practice of medicine#MSO#DPC model
Sources: California Expands Oversight of Private Equity in Healthcare with AB 1415 and SB 351 · Growing Health-Care, Private Equity Scrutiny Shadows 2026 Deals · 2026 Starts with a Flurry of State Activity on Private Equity and Healthcare · Oregon Governor Signs Law Aggressively Restricting Private Equity Investment in Medical Practices · Why Direct Primary Care Has Piqued Private Equity Interest · New California Health Care Transaction Rules Are Here: SB 351 and AB 1415 Are Now Effective

Only 35% of physicians held an ownership stake in their practice in 2024. That’s down from 53% in 2012 and roughly 76% in the early 1980s. The trend line isn’t subtle. Physicians are losing control of their own profession, and the biggest driver in recent years has been private equity.

Now, states are pushing back. And if you’re running or considering a DPC practice, the implications are worth understanding.

What’s Actually Happening

On January 1, 2026, two California laws took effect that fundamentally changed the rules for private equity in healthcare.

SB 351 codifies California’s corporate practice of medicine doctrine and explicitly prohibits PE firms, hedge funds, and their affiliates from interfering with physician clinical decisions. The law spells out what “interference” means: setting patient volume thresholds, determining which diagnostic tests a doctor can order, and controlling clinical protocols. If a PE-backed management services organization tells a physician how many patients to see per day, that’s now a violation of California law.

AB 1415 requires PE firms, hedge funds, and MSOs to file 90-day advance notice with California’s Office of Health Care Affordability before completing material healthcare transactions. The state can now review deals before they close, not after the damage is done.

California isn’t alone. Oregon’s SB 951, which took effect January 1, 2026 for new entities, goes even further. It bars PE-backed MSOs from controlling physician hiring, compensation, scheduling, coding, billing, and contracting with payers. The law essentially says: if you’re an investor, you can put money in, but you can’t run the practice.

The Full Map

California and Oregon are the headliners, but the movement is far broader than two states. As of early 2026, at least a dozen states have enacted or proposed legislation restricting PE in healthcare:

  • Pennsylvania proposed requiring 120-day pre-merger notice to the Attorney General, with minimum $100,000 penalties per violation.
  • Connecticut introduced a proposal to bar PE from acquiring hospitals or health systems entirely.
  • Vermont proposed prohibiting debt-financed acquisitions, below-market contracting, and MSO-driven practice marketing.
  • Hawaii would require 180-day advance notice and block transactions where a combined entity controls more than 25% of a relevant market.
  • New York, Rhode Island, Indiana, and Virginia have all introduced review, notice, or study requirements targeting PE healthcare deals.

Bloomberg Law described the landscape bluntly: the PC-MSO arrangement, long the standard structure for PE investment in physician practices, is “no longer a de facto safe harbor.”

Why Now

Global healthcare PE deal value hit a record $190 billion in 2025, according to Bain & Company. The money has been chasing physician practices for years, but subscription-based primary care models made the economics even more attractive. Predictable monthly revenue, no insurance intermediary, and a potentially massive new market of HSA-eligible patients.

Marketplace reported in January that “there’s probably no hotter investment category in the private equity ecosystem right now than employer health care.” The Premise Health-Crossover Health merger, backed by PE capital and creating a $2 billion employer primary care network, is one result of that interest.

But the same features that make physician practices attractive to PE are what make PE ownership problematic. When investors need returns, panels get larger, appointments get shorter, and the physician loses the autonomy that made the practice worth running. State legislators have seen enough evidence of this pattern to start writing laws against it.

What This Means for DPC

Here’s the part that matters if you’re a DPC physician or thinking about becoming one.

These laws are essentially trying to legislate what DPC already does by design. SB 351 says an outside investor can’t set your patient volume thresholds. In a physician-owned DPC practice, nobody sets your panel size but you. Oregon’s SB 951 says MSOs can’t control your scheduling or compensation. In a DPC practice, there’s no MSO.

The regulatory backlash against PE in healthcare reinforces the structural argument for physician-owned direct primary care. You don’t need a law to protect your clinical autonomy if your business model never gave it away in the first place.

That said, DPC isn’t immune to PE interest. With 58% of DPC memberships now employer-sponsored according to Hint Health, and HSA compatibility now resolved, subscription-based primary care has become exactly the kind of predictable-revenue business that PE firms love. Some of these new state laws could shape how DPC networks and platforms structure their relationships with physicians and investors going forward.

If you’re evaluating partnership arrangements, network affiliations, or platform agreements, these laws provide a useful framework. Ask yourself the questions California and Oregon asked: Who controls your panel size? Who decides which tests you can order? Who sets your schedule? If the answer to any of those is “someone other than me,” you might want to read the contract more carefully.

The states are drawing a clear line: physician autonomy isn’t negotiable. For DPC doctors, that’s not a new regulation to worry about. It’s a validation of the model you already chose.