September 22, 2026
A sweeping new piece of federal legislation introduced in both chambers of Congress on September 16, 2026, could reshape how medical practices are owned, managed, and contracted across every state in the country. Dykema's analysis of the Stop Corporate Takeovers of Physicians Act, authored by Zachary Q. Hoard, R. Craig Woods, Dean Gould, Natalie A. Skizas, and Logan Allen, breaks down the bill's core provisions and their potential significance for the healthcare industry.
Who Could Own a Medical Practice Under This Bill
The most foundational element of the legislation is a nationwide prohibition on majority ownership or control of medical practices by private equity funds, insurance companies, and other for-profit corporations. Under the bill, any partnership or corporate entity that owns a medical practice would need to be majority-owned and controlled by one or more state-licensed physicians.
The bill carves out exceptions for certain nonprofit and public healthcare providers, hospitals, hospital-affiliated clinics, and rural emergency hospitals.
Beyond the ownership threshold, the bill introduces what it calls an active practice requirement. A physician who owns a medical practice would need to be licensed in the state where the practice provides services and must be substantially engaged in delivering medical care. Dykema notes this would represent a meaningful departure from current norms, because the majority of states today impose no such requirement on physician owners.
New Limits on Management Service Organizations
The bill places significant new constraints on management service organizations (MSOs), which are commonly used to structure arrangements between investors and physician-owned practices.
- No succession or business continuity agreements: MSOs would be prohibited from entering into agreements that control or restrict the sale or transfer of a medical practice's shares, interests, or assets.
- Arm's-length contracting: Any contractual arrangement between an MSO and a medical practice would need to be negotiated with legal counsel and advisors independently selected by the practice, and compensation to the MSO would need to reflect fair market value.
- No ultimate decision-making authority: The bill explicitly prohibits MSOs from exercising ultimate decision-making authority over administrative, business, or clinical operations. The list of specifically prohibited decisions is extensive, covering hiring and firing, work schedules, staffing levels, how long a physician spends with a patient, revenue targets and disbursements, clinical standards, billing policies, service pricing, and contracting with third-party payors.
This set of restrictions is aimed directly at preventing what are sometimes called friendly physician or captive physician arrangements, in which a physician nominally owns a practice while an MSO retains operational control.
Restrictive Covenants Would Be Largely Banned
The bill would also prohibit physicians, healthcare providers, and MSOs from entering into non-compete, non-disclosure, or non-disparagement agreements, with one exception: such agreements could still be used if the physician owns or controls at least 25 percent of the medical practice.
How the Bill Interacts With State Laws
States that already have laws imposing equal or stricter ownership requirements, equal or stricter MSO restrictions, or equal or greater protections for licensed physicians would be able to keep those laws in place. The federal bill is designed as a floor, not a ceiling.
Three Enforcement Mechanisms
The bill establishes enforcement authority on three levels:
- The Federal Trade Commission could enforce the law directly.
- State attorneys general could bring civil actions on behalf of state residents.
- Individuals injured by violations could pursue a private right of action, with the ability to recover treble damages, attorney's fees, and litigation costs.
Courts finding a violation could order a cease and desist as well as disgorgement of revenue earned during the period of the violation. The bill would also amend the Social Security Act to allow exclusion of violating entities from federal healthcare programs.
How Likely Is This Bill to Advance
Dykema notes that government policy advisors do not consider the bill likely to advance in 2026. Even so, the firm emphasizes that the proposed restrictions merit close scrutiny. The provisions could resurface in broader healthcare legislation and may also accelerate state-level efforts to regulate corporate practice of medicine issues. Dykema has indicated it will continue monitoring the bill's progress.
Adapted from Bill Introduced To Establish New Federal Corporate Practice of Medicine Restrictions, originally published by Dykema on September 21, 2026.
Related professionals: Zachary Q. Hoard, R. Craig Woods, Dean Gould, Natalie A. Skizas.