Oregon Private Equity Healthcare Law | National First
Oregon has just passed a groundbreaking law drastically limiting private equity’s role in healthcare, setting a national precedent. Gov. Kotek’s bold move prohibits non-physician investors from owning medical practices, a direct response to rising concerns about corporate influence on patient care. This pioneering legislation, considered the most stringent in the U.S., seeks to close loopholes that allowed corporations to exert control indirectly.The new regulations allow for a three-year adjustment period for clinics while hospitals and tribal facilities are exempt. The law, drawing strong praise and criticism, arrives amidst increasing scrutiny of healthcare deals nationwide. Rep. Fragala highlights the potential for increased prices and decreased care quality with consolidation. News Directory 3 is staying on top of these crucial developments, and other states are already considering similar measures. Discover what’s next regarding how the new law will impact patient care.
Oregon Restricts Private Equity’s Role in Healthcare
Oregon Gov. Tina Kotek recently signed into law legislation designed to curb the influence of private equity in healthcare. The new law, considered the most aggressive of its kind nationwide, prohibits non-physician investors from owning medical practices, addressing concerns about corporate control and its potential impact on patient care.
The law addresses a perceived loophole in existing regulations that required physicians to hold at least a 51% stake in medical practices. Lawmakers found that corporations were circumventing this rule by employing physicians and designating them as nominal owners. the new legislation aims to close this gap, preventing corporate entities from exerting undue influence over medical decisions.
While the law takes aim at private equity in healthcare, it includes a three-year adjustment period for clinics to comply. Hospitals,tribal health facilities,and behavioral health programs are exempt from the new requirements.
The move comes amid growing national scrutiny of healthcare deals and the increasing role of private equity. The collapses of Steward Health Care and Prospect Medical Holdings, both previously under private equity ownership, have intensified calls for greater oversight. Several states, including Massachusetts, New Mexico, Indiana, and Washington, have already passed laws to strengthen state oversight of healthcare transactions. Pennsylvania lawmakers are considering similar measures.
Rep. Lisa Fragala, D-Eugene, said witnessing the effects of corporate ownership in healthcare drove the push for the Oregon law. She cited the acquisition of Eugene-based Oregon Medical Group by Optum, a UnitedHealth subsidiary, in 2020. Following the acquisition, some doctors reportedly left the practice, alleging a shift toward prioritizing profits over patient care. Oregon Medical Group later directed some patients to seek care elsewhere due to doctor shortages.
“When we see consolidation in the healthcare market, we see three things happen: higher prices, negative effects on the quality of care, and decreased access to care,” Fragala said in a statement.
The Oregon Ambulatory Surgery Center association voiced concerns about the law,arguing that private investment is crucial to their operations. They noted that in some communities, hospitals may not be able to financially support struggling clinics.
Sen.Elizabeth Warren, D-Mass., praised the Oregon law on X, calling it the “strongest” protection against corporate profiteering. She has advocated for stronger policies against private equity, including criminal penalties for executives whose mismanagement leads to patient deaths.
“Congress should follow and get private equity out of health care nationwide,” Warren said.
Law firms have described Oregon’s law as the “toughest state barrier” and “most aggressive” limit on private equity involvement in medical practice management.
What’s next
The Oregon law will be closely watched as othre states consider similar measures to regulate private equity’s influence in healthcare.The three-year adjustment period will allow clinics to adapt, but the long-term impact on healthcare access and quality remains to be seen.