Warren, Ocasio-Cortez introduce bill to ban corporate ownership of physician practices

Sen. Elizabeth Warren, D-Mass., Sen. Ron Wyden, D-Ore., Sen. Jeff Merkley, D-Ore., Rep. Val Hoyle, D-Ore., Rep. Alexandria Ocasio-Cortez, D-N.Y., and Rep. Suhas Subramanyam, D-Va., introduced the Stop Corporate Takeovers of Physicians Act on September 16, according to Warren’s office.

The bill would make it illegal for private equity funds, insurance companies and other for-profit corporations to own or control medical practices, per the announcement. It would also close what the lawmakers call the “friendly physician” loophole, which they say has let investor-backed corporations use physicians as figureheads to evade state-level bans on corporate ownership while still controlling practices through management services organizations, known as MSOs.

Over 80 percent of doctors in the United States are employed by corporate entities, including private equity firms and insurers, up from 62 percent in 2019, according to the lawmakers’ announcement. More than thirty states already prohibit the corporate practice of medicine, but corporations have exploited legal loopholes to get around those restrictions, the announcement said.

The legislation is modeled on Oregon Senate Bill 951, a state law that physicians have already used to challenge corporate takeovers, KTVZ reported. Oregon House Majority Leader Ben Bowman, the law’s author, said Eugene Emergency Physicians used it to stop Peace Health from replacing local doctors with a private equity-backed staffing company.

“Patients want to know that decisions about their health are being made by their doctors, not by Wall Street investors,” Warren said in a statement. “If we’re going to lower costs and un-rig the health care system, we need to stop the corporate takeover of medicine.”

The bill would be enforced through three channels: the Federal Trade Commission, lawsuits filed by state attorneys general, and a private right of action allowing physicians to sue for treble damages, according to Dr. Marco Fernandez, president and co-founder of the Association for Independent Medicine, which endorsed the bill. Fernandez said that layered enforcement, combined with a mandatory divestment requirement, gives the bill “teeth that earlier CPOM laws have often lacked.”

The legislation would also ban restrictive contract terms for physicians, including noncompete agreements, nondisclosure agreements and non-disparagement agreements, according to Warren’s office.

Rep. Ocasio-Cortez said private equity firms and corporate conglomerates are buying up American physician offices to increase shareholder profits. “These entities often cut corners, leading to patients paying more for significantly worse care,” she said. “I’m proud to co-lead the Stop Corporate Takeovers of Physicians Act to get Wall Street out of Americans’ doctors’ offices and ban predatory noncompete agreements for healthcare workers.”

The bill is also backed by Representatives Yassamin Ansari, Yvette Clarke, Chris Deluzio, Maxine Dexter, Maxwell Frost, Eleanor Holmes Norton and Rashida Tlaib, according to the announcement. It has been endorsed by organizations including the American Academy of Emergency Medicine, the American Economic Liberties Project, the Private Equity Stakeholder Project and Families USA.

Dr. Rob Davidson, executive director of the Committee to Protect Health Care, said the corporate practice of medicine has grown dramatically in recent years. “It’s time for federal action to address this growing issue and ensure that decisions about patient care are made by physicians, not CEOs,” Davidson said.