Private Equity
Vermont Joins Growing Trend to Oversee Private Equity Investment in Clinical Care
On June 15, 2026, Vermont Governor Phil Scott signed H.583 (“Act 133”) into law, making Vermont the most recent state to reinforce their Corporate Practice of Medicine doctrine by restricting private equity and hedge fund influence over clinical decision-making. The legislation follows a flurry of interest from states inspired by similar legislative action in both Oregon and California. This blog post provides a general overview of Vermont’s new restrictions and places them in the context of the broader national trend toward scrutiny of private investment in health care. Act 133 has three operative sections: § 9772 codifies Vermont’s common-law prohibition on corporate involvement in clinical decision-making as it relates to private equity and hedge fund investments; § 9773 requires disclosure of private equity and hedge fund ownership and control interests in certain health care entities; and § 9774 provides for public transparency and sharing of such ownership information. Restrictions on Private Equity Influence Over Clinical Decision-Making Section 9772 is the substantive heart of Act 133. It establishes that clinical decision-making and other core functions affecting patient care must remain under the control of licensed health care professionals, effectively codifying, at least in part, Vermont’s Corporate Practice of Medicine doctrine. This section specifically prohibits private equity groups or hedge funds from: interfering with providers’ clinical judgment, including by determining appropriate diagnostic tests, referrals to other providers, patient treatment options, work schedules, and patient loads; and exercising control over, or being delegated the power to set: (i) clinical standards or policies; (ii) access to and control of patient medical records; (iii) hiring or firing of medical professionals based on clinical competency or proficiency; (iv) parameters for contracting with third-party payers or other providers; (v) prices or rates for a provider’s services; (vi) coding and billing decisions; and (vii) selection or approval of medical equipment and supplies. Section 9772 does not prohibit private equity firms and hedge funds from investing in health care entities. Nor does it ban unlicensed individuals or entities from providing non‑clinical management, administrative, or business services, so long as a licensed health care professional retains ultimate responsibility for or approval of any decisions affecting patient care. Finally, § 9772 creates a private right of action for health care providers to seek equitable relief, actual damages, costs, and attorney’s fees against a private equity group or hedge fund (or entity controlled directly, in whole or part, by one). New Ownership and Control Disclosure Requirements Section 9773 establishes a mandatory disclosure and data sharing regime to ensure transparency around private equity and hedge fund involvement in health care. It requires defined health care entities and management services organizations (“MSO”), which are owned at least in part by private equity groups or hedge funds (“Applicable Entities”), to report specific ownership and control information (enumerated below) to Vermont’s state health regulatory board, the Green Mountain Care Board (the “State Board”). Certain entities are exempted, including nursing homes, health care staffing companies, organizations whose services are delivered exclusively through telehealth, and federally qualified health centers. Notably, health care entities and MSOs with no private equity or hedge fund ownership or investment must still attest to no such ownership or investment. Under this section, Applicable Entities must report to the State Board: the name, business address, and business identification numbers for each person that has an ownership, investment, or controlling interest, has a significant equity investment, or is an MSO of a health care entity; a current organizational chart showing the business structure of the health care entity or MSO, including affiliates and subsidiaries; and the health care entity’s or MSO’s most recent fiscal year’s profit and loss statement and balance sheet. Additionally, the State Board must work with the Agency of Human Services and relevant stakeholders to develop data reporting processes pursuant to these requirements. Information shared pursuant to this section shall be public information and not considered confidential, proprietary, or a trade secret, except for specified personal identifying information and certain confidential financial information. Lastly, § 9773 institutes financial penalties of up to $10,000 per year for failing to report required information and up to $25,000 for each material misrepresentation reported. Public Reporting and Transparency Requirements Section 9774 promotes transparency by requiring the State Board to report all ownership and control disclosures made under § 9773. It authorizes interagency sharing of that information for oversight and enforcement and provides that, except for specified personal identifiers, the information is public. Lastly, the section permits the State Board to share reported information with the Attorney General, Secretary of State, and other state agencies and officials to prevent duplicative reporting requirements and facilitate oversight and enforcement pursuant to Vermont law. The Big Picture Act 133 is one example of the larger national trend toward increased scrutiny of health care ownership and control. While Vermont’s new law appears to specifically focus on control over clinical decision-making by private equity and hedge funds, numerous other states, including Oregon, Massachusetts, Indiana, New Mexico, and Washington, passed broader ownership transparency-related laws in 2025 and 2026 (with other additional states at least considering such bills). Collectively, these measures reflect a broad national movement toward increased scrutiny of lay-investor influence in the health care sector. Please contact the authors or your regular Dorsey attorney with any questions about how these restrictions could affect your current business model or any contemplated transactions.
June 24, 2026
by Randall Hanson, Jamie McCarty, and Michael Forstein
Private Equity
Oregon Expands Prohibition on the Corporate Practice of Medicine, Severely Restricting Management Services Organizations
On June 9, 2025, Oregon Governor, Tina Kotek, signed SB 951[1] into law, making Oregon’s “corporate practice of medicine” doctrine one of the country’s most restrictive. SB 951 places numerous restrictions on the relationships between management services organizations and clinician practices, which will impact many of the written arrangements and techniques that management services organizations and clinician practices currently use. SB 951 also places new and/or clarified restrictions on professional medical corporation structuring and the use of certain restrictive covenants in contracts among health industry parties. This blog post provides a general overview of these new restrictions. Key Definitions Here are key definitions that help clarify the scope of SB 951: “Management services organization” or “MSO” is defined as an entity that provides management services to a professional medical entity in return for monetary compensation under a written agreement. “Management services” is broadly defined and includes payroll, human resources, employment screening, employee relations, and other administrative or business services. “Medical licensee” or “licensee” is defined as an individual who is licensed in Oregon to practice medicine or naturopathic medicine or as a nurse practitioner or physician assistant. “Professional medical entity” is defined as an Oregon professional corporation organized for the purpose of practicing medicine, practicing naturopathic medicine, or allowing physicians, nurse practitioners and physician assistants to jointly render healthcare services, or a limited liability company, partnership limited liability partnership or partnership organized for a medical purpose that is authorized to transact business in Oregon.[2] Restrictions on MSOs MSOs, including their shareholders, directors, members, managers, officers and employees (collectively, “agents”), may not, with certain exceptions: own or control a majority of; be a director, officer, employee or independent contractor of, or receive compensation from the MSO to manage; or exercise a proxy, right or power to vote the shares of; a professional medical entity with which it has a management services agreement (“MSA”). Additionally, MSOs and their agents may not, with certain exceptions: control or enter into agreements to, or otherwise permit a non-licensee to, control or restrict the sale or transfer of a professional medical entity’s ownership interests or assets; issue, or cause a professional medical entity to issue, ownership interests in the professional medical entity or a subsidiary or affiliate of the professional medical entity; pay dividends from a professional medical entity’s ownership interests; acquire, or finance the acquisition of, a majority of a professional medical entity’s ownership interests; or exercise de facto control over a professional medical entity’s administrative, business or clinical operations in a manner that affects the professional medical entity’s clinical decision making or the nature and quality of its medical care, which includes, but is not limited to, hiring or setting compensation for licensees, setting clinical or billing and collection policies, and negotiating agreements with third-party payors and other third parties that are not employees of the professional medical entity. So, what can an MSO still do? SB 951 clarifies that the restrictions still permit an MSO to: enter into agreements to control or restrict the transfer or sale of a professional medical entity’s ownership interests or assets for cause, including, but not limited to, an owner’s loss of their professional license, exclusion from a federal health care program, breach of the MSA or death; provide management services as long as the MSO is not exercising de facto control over a professional medical entity’s operations in a manner that affects the professional medical entity’s clinical decision making or the nature and quality of its medical care; purchase, lease or take assignment of a right to possess a professional medical entity’s assets in an arms’-length transaction with a willing seller, lessor or assignor; provide support and consultation on any business operations matters, such as accounting, facilities management and compliance with applicable laws; advise a professional medical entity’s participation in payor arrangements, value-based arrangements or vendor agreements; collect quality metrics as required by law or one of the professional medical entity’s agreements; and set criteria for reimbursement under an agreement between a professional medical entity and a payor. Any MSA provision that violates any of the above restrictions is void and unenforceable. Additionally, professional medical entities and licensees have a private right of action against MSOs and the MSO’s agents, and damages may include actual damages, an injunction or other equitable relief, punitive damages and attorneys’ fees. Existing MSOs and professional medical entities conducting business in Oregon have until January 1, 2029 to comply with these restrictions. However, new MSOs and professional medical entities planning to conduct business in Oregon, including those involved in a sale or transfer of ownership, must comply with these restrictions by January 1, 2026. Restrictions on Professional Medical Corporations SB 951 also imposes restrictions on professional medical corporations (“PCs”), with certain exceptions. PCs’ articles, bylaws and other organizational arrangements may not allow for the removal of any director or officer without a majority vote of licensee-shareholders or licensee-directors, except for cause. Additionally, PCs may only replenish or transfer control over their operations through a valid shareholder agreement that is solely among and for the benefit of a majority of shareholders who are physicians licensed in Oregon. These restrictions apply to any agreements that are entered into or renewed on or after June 9, 2025. Non-Competition, Non-Disclosure and Non-Disparagement Agreements Lastly, non-competition agreements with professional licensees that restrict the practice of medicine or nursing as well as non-disclosure and non-disparagement agreements between an MSO, hospital or hospital-affiliated clinic and an employed licensee are void and unenforceable, with certain exceptions. These restrictions also apply to any agreements that are entered into or renewed on or after June 9, 2025. The Big Picture Notably, as of 2022, OHA requires notice of and reviews material health care transactions. This, along with the passage of SB 951, indicates Oregon’s strong focus on its regulation and oversight of the “corporate practice of medicine.” And Oregon is not alone. These are recent developments in a long history of state concerns with the separation of corporations and unlicensed individuals and healthcare professional’s medical decision making and patients’ care (i.e., the corporate practice of medicine) and, more recently, private equity involvement in health care. SB 951 materially reinforces and expands Oregon’s “corporate practice of medicine” doctrine and impacts not only MSAs but other MSO-practice relationships, MSO and PC governance and agreements with restrictive covenants. SB 951 raises difficult issues such as the permitted scope of an MSO’s authority if the requirement is to avoid control that affects the professional medical entity’s clinical decision making or the nature and quality of medical care. Given the wide-reaching implications of this new law and to ensure compliance with SB 951 by the applicable compliance dates, existing MSOs and clinician practices conducting business in Oregon will need to review and likely revise their current business models, practices, and written agreements as necessary, and new MSOs and clinician practices planning to conduct business in Oregon will need to closely review their proposed business models and practices. Please contact the authors or your regular Dorsey attorney with any questions about how these restrictions could affect your current business model or any contemplated transactions. [1] https://olis.oregonlegislature.gov/liz/2025R1/Downloads/MeasureDocument/SB951/Enrolled. [2] While this law does not currently apply to other healthcare providers. Oregon House Majority Leader, Ben Bowman, predicts that future legislative sessions will likely address the expansion of this law to other healthcare providers, such as hospitals and dentists.
June 25, 2025
by Ross C. D'Emanuele, Randall Hanson, and Laura C.S. Newberry
