At least 79 bills addressing private equity transactions and investor-backed ownership in healthcare have been introduced across 26 states in 2026 alone, according to a May analysis published in The American Journal of Managed Care.
The pace has accelerated sharply: seven states passed new reporting requirements or restrictions on private equity in healthcare in 2025, compared with just one in 2024. The push has been driven in large part by the 2025 bankruptcies of two high-profile private equity-backed hospital chains — Dallas-based Steward Health Care and Los Angeles-based Prospect Medical Holdings — which left communities across the country with reduced access to care. Meanwhile, global healthcare private equity deal value hit a record $191 billion in 2025, surpassing the previous peak set in 2021, according to Bain & Co.
Here are five recent state-level efforts to enhance regulations surrounding private equity activity in healthcare:
1. Connecticut banned hospital sale-leasebacks.
Gov. Ned Lamont signed Senate Bill 196 into law May 27, establishing the first statewide ban in the country on hospital sale-leaseback transactions — arrangements in which a hospital sells its real estate to an investment firm and then pays rent on property it formerly owned.
The law also bars private equity entities from holding controlling authority over hospital governance and operations, and requires hospitals to certify annually that no such control exists. The legislation came directly in response to the collapse of Prospect Medical Holdings, which filed for bankruptcy in 2025 and triggered the closure of three Connecticut hospitals.
2. Washington lawmakers are eyeing a corporate medicine ban — with Oregon as the model.
Washington state lawmakers are reconsidering anti-corporate medicine legislation after Oregon’s law survived its first major legal challenge. Washington has failed twice to pass corporate practice of medicine bills, which broadly prohibit corporations and shareholders from owning or controlling medical practices.
The renewed interest follows a dispute between Vancouver, Wash.-based PeaceHealth and Eugene Emergency Physicians over PeaceHealth’s attempt to replace its 35-year ED staffing partner with Atlanta-based ApolloMD. Local physicians sued to block the move under Oregon’s Senate Bill 951 — the nation’s strictest corporate medicine law, signed by Gov. Tina Kotek in June 2025, which requires physicians to hold at least a 51% ownership stake in most practices and bars corporations from exerting decision-making control over medical groups.
3. California restricted PE interference in clinical decisions.
Gov. Gavin Newsom signed two bills in October 2025 prohibiting private equity firms and hedge funds from interfering, contractually or otherwise, with healthcare professionals’ clinical judgment. The laws bar those entities from controlling medical records, provider hiring and firing, payer contract terms, billing and coding and equipment selection.
4. Illinois and Washington expanded transaction notification requirements.
Illinois’ legislature passed HB 5000 on May 28, broadening the types of healthcare transactions subject to advance notice to the state attorney general. Washington signed a similar expansion into law March 25, effective June 11.
5. A federal bill has entered the picture.
Sen. Chris Murphy, D-Conn., introduced the Take Back Our Hospital Act in March, targeting hospital sale-leaseback arrangements and private equity ownership of nursing homes nationally. The bill has not advanced to a vote.