The Corporate Raiding of American Healthcare: Why State Resistance to Private Equity is a Fight for Medical Freedom

The Alarming Expansion of Private Equity in Medicine

In a sweeping movement across the United States, state governments are mounting a crucial defense against the financialization of our healthcare system. This year alone, at least seven states—California, Indiana, Massachusetts, Maine, New Mexico, Oregon, and Washington—have enacted legislation to increase oversight and transparency of private equity acquisitions in healthcare. This represents a significant shift in the regulatory landscape as policymakers recognize the profound threat that profit-maximization models pose to patient care and medical ethics.

Private equity’s involvement in healthcare isn’t entirely new, but its scale and scope have exploded over the past decade. According to Professor John McDonough of Harvard’s T.H. Chan School of Public Health, private equity interests now extend to “every imaginable iteration of medical care,” from hospitals and nursing homes to hospice care, physician practices, and even veterinary services. The numbers are staggering: researchers from the University of California, Berkeley found that acquisitions of physician practices rose from 816 in 2012 to 5,779 in 2021—a more than sevenfold increase in just nine years.

The State Legislative Response: A Patchwork of Protections

The state-level response to this corporate encroachment has been both varied and vigorous. Massachusetts and California have expanded reporting requirements to include previously exempt entities like private equity firms, real estate investment trusts, and management service organizations. These laws also grant attorneys general greater investigatory power over healthcare transactions. Indiana has taken a different approach, focusing on market concentration by giving its attorney general authority to investigate potentially anti-competitive practices.

Oregon’s legislation represents perhaps the most aggressive stance, not only limiting how much of a healthcare market private equity firms can acquire but explicitly barring them from having any control over clinical operations. The state also empowered itself to block transactions that violate these provisions. California complemented its transparency law with additional protections prohibiting private investors from interfering with the clinical judgment of physicians and dentists—a crucial safeguard for medical autonomy.

New Mexico strengthened its existing Health Care Consolidation Oversight Act, making temporary oversight authority permanent and more expansive while establishing penalties for non-compliance. Washington state created a registry of all healthcare entities to improve transparency. Most dramatically, Maine imposed a one-year moratorium on all private equity or real estate investment trust purchases of hospitals—a temporary but significant pause button on the financialization of critical care infrastructure.

The Fundamental Conflict: Patient Care Versus Profit Extraction

At the heart of this legislative pushback lies a profound ethical conflict that strikes at the very soul of medical practice. As Professor McDonough starkly observes, “The purpose of the dealmaking is to enrich the owners as quickly as possible, and then get out and move on to your next conquest. And so there’s a fundamental conflict there between duty to patients as a primary obligation and return on profits to shareholders.”

This tension represents more than just a philosophical disagreement—it’s a practical threat to healthcare delivery. Private equity firms operate on a fundamentally different timeline and with different priorities than healthcare providers. Their business model typically involves acquiring companies, boosting their short-term value through often drastic measures, and selling within three to seven years for substantial profits. This approach might work for manufacturing widgets, but it’s dangerously misaligned with the long-term, relationship-based nature of quality healthcare.

The Dangers of Financialized Medicine

The research findings are alarming: some single private equity firms have captured 30-50% of specialty practices in local markets. This level of market concentration raises serious concerns about competition, pricing, and ultimately, patient choice. When financial engineers control such significant portions of healthcare delivery, the incentives shift from optimal patient outcomes to optimal financial returns.

Private equity firms argue that their investments upgrade technology and increase efficiency, particularly benefiting rural and underserved areas. While capital infusion can certainly improve facilities and equipment, the fundamental question remains: at what cost? Efficiency gains that come at the expense of staffing levels, treatment time, or clinical autonomy represent false economies that ultimately harm patients.

Michael Fenne of the Private Equity Stakeholder Project highlights the critical role states play in this landscape, noting that “there’s not really federal law that targets private equity acquisitions in the same way [as laws] that states have been passing recently.” In the absence of comprehensive federal action, state legislatures have become the primary bulwark against the wholesale financialization of American healthcare.

The Democratic Imperative: Protecting Healthcare from Predatory Capital

This state-level resistance represents more than just regulatory action—it’s a democratic response to the threat that unaccountable financial interests pose to essential human services. Healthcare, perhaps more than any other sector, embodies the social contract between citizens and their government. When profit-seeking entities treat medical practices as assets to be stripped rather than community resources to be nurtured, they undermine this fundamental compact.

The legislative approaches vary, but they share a common recognition that healthcare cannot be treated like any other commodity. The Oregon law’s prohibition on private equity control over clinical operations acknowledges that medical decisions must be made by medical professionals, not financial analysts. California’s protection of physician judgment similarly defends the sanctity of the doctor-patient relationship from corporate interference.

These measures represent precisely the kind of thoughtful, principled governance that protects both economic freedom and human dignity. They don’t prohibit private investment in healthcare, but they establish necessary guardrails to ensure that such investment serves rather than subverts the primary mission of healing.

The Path Forward: Principles for Healthcare Preservation

As this movement grows, several principles should guide further action. First, transparency must be non-negotiable—patients and communities deserve to know who ultimately controls their healthcare providers. Second, clinical autonomy must be protected from financial pressure—no investor should ever influence medical decisions. Third, market concentration must be monitored and limited to preserve competition and choice.

Most importantly, we must recognize that healthcare occupies a special category in our society and economy. It’s not merely another industry to be financialized, optimized, and leveraged for maximum returns. Healthcare represents our collective commitment to preserving human dignity, alleviating suffering, and ensuring that every person—regardless of wealth or status—has access to competent, compassionate care.

The state actions chronicled here represent a promising start, but the work is far from complete. Other states should follow suit with similar legislation, and federal lawmakers should consider establishing baseline protections that prevent a race to the bottom among states competing for private equity dollars. We must also support the medical professionals who find themselves caught between their ethical duties to patients and the financial demands of corporate owners.

Conclusion: Healthcare as Human Right, Not Financial Instrument

In the end, this issue transcends partisan politics or economic theory. It speaks to fundamental questions about what kind of society we want to be. Do we accept the financialization of every aspect of human life, including our health and wellbeing? Or do we recognize that some domains are too precious, too intimately connected to human dignity, to be subjected to the relentless logic of profit maximization?

The state legislators pushing back against private equity encroachment are defending more than just healthcare markets—they’re defending the principle that some things should not be for sale, that some relationships should not be monetized, and that some services are too essential to be left to the whims of financial speculators.

This is not anti-business sentiment; it’s pro-human policy. It recognizes that while markets serve many valuable functions, they cannot be allowed to dictate terms when human lives and wellbeing are at stake. The fight to preserve the soul of American healthcare is just beginning, but these state-level actions provide hope that democracy can still prevail over dollars in defending what matters most.