by Marc Beckman and Benjamin Goldberg
Almost two years ago, New York enacted PHL Article 45 A, which took effect on August 31, 2023. One of the intents behind this law was flagging large business consolidation in the healthcare field, potentially allowing New York’s Department of Health to regulate the increased transaction prices, reduced competition, or narrowed access to healthcare for residents of the state. Please see our previous article formore information on PHL 45-A here. Importantly, New York’s statute includes Managed Services Organizations (“MSOs”), even though they do not provide healthcare services themselves, as part of any healthcarerelated transaction subject to review.
New York is not the only state to take steps, even if small ones, toward reinvigorating the Corporate Practice of Medicine (“CPOM”) doctrine, and the common law, statutes, regulations, and ideas that had previously undergirded it. In 2025 alone, 12 states, from California to Indiana to South Carolina, have introduced at least one bill each, intending, in some way, to revive CPOM doctrine and update it for the current century. As an example, one of the bills introduced in Connecticut is titled “An Act Prohibiting A Private Equity Firm From Acquiring, Owning Or Controlling A Health Care Provider’s Practice Or Health Care Facility And Requiring The Disclosure Of A Change In Ownership Of Such A Practice Or Facility.”
There are two obvious routes by which legislatures can strengthen statutory opposition to such corporate control of medical practices: 1) focus on the MSOmedical practice nexus by which previous CPOM doctrines have been circumvented, and 2) provide more tools for anti trust enforcement on the state level in order to give regulators the power to halt the industry consolidation. Taking New York’s PHL 45-A as an example, that law, in essence, provided some anti-trust regulatory power to the New York State Department of Health as it focused on the consumer harms of reduced competition. The other route, focusing on MSOs and their control of medical practices, is seen in proposed legislation in North Carolina and Vermont.
The North Carolina bill would prohibit common stakeholders between medical practices and MSOs. The bill also expressly reserves the right to make medical decisions for physicians under contract with an employer or working as independent contractors. Furthermore, the bill sets out that after receiving a complaint, the onus will be on the organization in question to prove, by explanations of the business structure and affirmations, that the physicians are in control of the medical decisions. And recently, on June 9, 2025, Oregon signed into law “An Act Relating to the Practice of Health Care,” which is taking aim at the MSO practice model by prohibiting MSOs from having the ultimate authority over things like hiring physicians, setting work schedules and compensation, setting policies for billing and collection, and negotiating contracts with third-party payors. Another interesting aspect of the Oregon bill is that it takes direct aim at restrictive covenants. Restrictive covenants are a typical way for the MSO medical practice model to control the ability of physicians to break away from their current employer, and as such, are a powerful tool in the arsenal of private equity and other nontraditional business organizations that have moved in the healthcare industry seeking profits.
Finally, physicians are also beginning to push back. In Am. Acad. of Emergency Med. Physician Grp., Inc. v. Envision Healthcare Corp., No. 22-CV-00421-CRB, 2022 WL 2037950 (N.D. Cal. May 27, 2022) and Hosp. Internists of Austin, P.A. v. Quantum Plus, LLC, No. 1:18-CV-466-RP, 2019 WL 1922051 (W.D. Tex. Jan. 23, 2019), physicians have sued business organizations affiliated with Kohlberg Kravis Roberts (KKR) and Blackstone, winning the case in Texas and forcing a strategic withdrawal from the KKR group from the entire California market rather than lose the case and face continued scrutiny.
While the last decade or more has seen the increasing financialization of the healthcare field, with private equity groups and even Amazon angling for a portion of the approximately four trillion dollars that flows through the US healthcare industry, there appears to be more and more signs that states and physicians are taking steps, even if halting and uneven, to return power and force to CPOM doctrines by updating statutes and increasing regulatory power in order to combat the means of control used by those non-medical organization that have bought their way into the healthcare field and exerted control over physicians.
While it is still too early to tell how this will shake out on a national scale for the healthcare industry, private equity, and other large corporate interests, it will be important to keep an eye on the developments in this arena over the next several years. It should also be noted that these recent developments, the new bills, and the strengthening of the CPOM doctrine do not easily break down along the partisan lines in the United States. With widespread polling showing sustained dissatisfaction with the healthcare industry in its current form, this could be a rare bipartisan focus for the future.
If you have questions pertaining to the aforementioned changes, please contact Marc S. Beckman (mbeckman@lippes. com), Benjamin W. Goldberg (bgoldberg@lippes.com) or another one of our qualified Health Care Practice Team members at Lippes Mathias.
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