Private investment in healthcare entities continued at a high pace in 2025, reaching global highs in deal value. Many companies invested in entities such as nursing homes, hospitals and certain specialties like dentistry, anesthesia and emergency medicine and dermatology.
A consequence of the high deal volume has been increased attention and scrutiny by many state governments of transactions between private equity and certain healthcare entities.
Last year, the Texas Insider reported that Texas has almost 100 hospitals backed by private equity. Texas medical societies are now focusing on (1) setting ethical guidelines for clinical practices with private equity investment and (2) compliance with the corporate practice of medicine (CPOM) doctrine.
Thirty-five states have some form of healthcare transaction review law. These healthcare transaction reporting requirements differ from those of other corporate transactions, such as changes of ownership or facility closures. Healthcare transaction reporting requirements are broader and relate more specifically to the financial and ownership interests of a business in a healthcare entity. For example, these requirements often apply broadly to healthcare entities regardless of specific licensure, and they often focus on the transactions’ dollar value above a specified level, as well as their impact on healthcare cost, quality, access, equity and competition. They also frequently require disclosure of upstream and indirect ownership interests to government agencies. Some healthcare transaction filings require the affirmative approval of the government agency before a proposed transaction can close.
Texas failed to pass a healthcare transaction reporting law in the most recent legislative session. In 2025, the Texas House of Representatives introduced H.B. 2747, which would have required healthcare entities to provide written notice to the Texas attorney general of any material change transaction at least 90 days before it took effect. A “material change transaction” means “a transaction that entails a material change to ownership, operations, or governance structure” of legal entities. “Health care entity” means “a health care provider, health care facility, provider organization, pharmacy benefit manager, or health carrier that offers a health benefit plan” in Texas. Failure to comply with H.B. 2747’s notice requirements could have resulted in penalties of up to $10,000 per violation.
The Texas Senate introduced a similar bill, S.B. 1595, which would have required self-disclosure and reporting from healthcare entities undergoing material change transactions in Texas with total assets and annual revenue of at least $10 million, as well as new entities with anticipated annual revenue of at least $10 million. These entities would have been required to report ownership and control information to the Texas secretary of state upon closing a material change transaction, as well as annually thereafter. Failure to provide a complete report, or submitting false information, could have resulted in penalties of up to $500,000 per violation. S.B. 1595 and H.B. 2747 did not pass the 2025 regular legislative session, they but may be harbingers of similar future regulation to come.
Texas providers may also wish to consider the effect of the CPOM doctrines on prospective equity and private ownership deals. That doctrine prohibits nonphysicians from practicing medicine or owning a medical practice. The participation of outside third parties who seek to own or control a medical practice by investing in or managing it may trigger potential CPOM violations if not structured correctly. Approximately 33 states have CPOM doctrines, and although many states did not always enforce these laws or doctrines, they have considered using them to address potential corporate practice violations with private equity and other nonphysician ownership arrangements. For example, Oregon passed legislation in 2025 that prohibits management services organizations from owning or controlling a majority interest in professional medical entities.
In Texas, the Texas Occupations Code establishes medical license requirements that can only be fulfilled by a “person,” whose definition does not include corporate entities. The Code also further restricts a practitioner’s ability to delegate the authority to practice medicine and states that “[a] person, partnership, trust, association, or corporation commits an offense if the person, partnership, trust, association, or corporation, through the use of any letters, words, or terms affixed on stationery or on advertisements, or in any other manner, indicates that the person, partnership, trust, association, or corporation is entitled to practice medicine if the person, partnership, trust, association, or corporation is not licensed to do so.”
There are some statutory and case law exceptions to Texas’ general prohibition on CPOM, including certain nonprofit entities and hospital districts that can employ physicians, as well as permitted joint ventures between physicians and other licensed professionals such as podiatrists and optometrists. Texas case law has also indicated that certain corporate entities that engage in management agreements with, but lack the ability to control, the physician’s medical choices likely do not fall within CPOM. Nonetheless, Texas’ prohibition against CPOM should serve as a cautionary tale for Texas entities and investors seeking to acquire or operate healthcare entities.
In 2026, investors may be more targeted in their investments, and the state of Texas will likely continue to evaluate the impact of private ownership and private equity on the cost of healthcare.
Sheryl Tatar Dacso serves as senior counsel with Greenberg Traurig, LLP’s Health Care & FDA Practice in Houston. She works with healthcare organizations, hospitals and physicians on health care compliance, regulations and transactions, including physician practice formation, mergers, acquisitions and business ventures, as well as digital health and telemedicine.
Janus Pan is an associate with Greenberg Traurig, LLP’s Health Care & FDA Practice in Houston. She advises healthcare providers on transactional, regulatory and government investigations matters.
