How States Can Combat Health Care Consolidation and Corporate Conflicts of Interest

A wave of consolidation and corporate ownership of physician practices is sweeping through the American health care system, leaving communities across the country facing higher prices and less access to care.¹ Hospital systems are merging with competitors, private equity firms are rolling up physician practices, and insurers are vertically integrating, creating health care markets that large entities increasingly dominate with outsized power over patients, providers, and workers.²

Federal antitrust enforcement has proven insufficient to stem these trends. The Federal Trade Commission and U.S. Department of Justice review only a fraction of transactions, concentrating on the largest deals while overlooking smaller deals that, in aggregate, transform local markets.³ Many private equity acquisitions and vertical integrations fall below federal reporting thresholds, allowing them to avoid review even as their combined impact undermines competition.⁴

States, however, possess substantial power to act. State governments have long regulated health care markets and retain broad authority to protect residents from anticompetitive conduct and corporate practices that threaten access to care.⁵ This issue brief provides an overview of state policy levers to curb consolidation, including enhanced oversight of corporate transactions, limits on corporate control, and price regulation and cost control.

Strengthening state oversight of corporate health care transactions is a critical step in combating consolidation, which frequently occurs with limited transparency.⁶ Without meaningful state review, mergers, acquisitions, and other financial arrangements can permanently alter health market dynamics.⁷ Comprehensive transaction oversight, including of private equity acquisitions, enables regulators to identify harmful deals early, assess cumulative impacts, and intervene to protect access and affordability.

Enhanced health care transaction review

Historically, states emphasized that they should be notified before transactions so they could review mergers, acquisitions, and other structural changes and affiliations.⁸ As consolidation accelerated and corporate ownership structures grew more complex, this approach proved insufficient to protect patients, workers, and communities from the cumulative effects of market concentration.⁹

Enhanced state transaction review laws build on and expand existing authority in three important, complementary ways. First, they apply transaction thresholds below federal antitrust standards, capturing smaller deals that do not rise to federal scrutiny but cumulatively concentrate market power.¹⁰ Second, they require broader public-interest review, allowing regulators to assess how transactions affect community access, health care costs, and workforce conditions in addition to traditional competition concerns.¹¹ Third, they include post-closing oversight and reporting requirements, enabling states to monitor corporations’ compliance with approval conditions and respond if anticipated benefits fail to materialize.¹²

In 2025, New Mexico passed the Health Care Consolidation Oversight Act.¹³ The robust approval-based framework grants the New Mexico Health Care Authority the ability to review and approve mergers, acquisitions, and changes of control involving hospitals and certain provider organizations.¹⁴ Transactions may be approved only if they increase access to affordable, quality care, particularly in underserved areas, without unjustified cost increases or anticompetitive effects.¹⁵ The law includes strong enforcement mechanisms, whistleblower protections, and three-year post-closing reporting requirements to ensure accountability beyond the initial approval.¹⁶

Review of private equity and roll-up strategies

Private equity firms are increasingly targeting physician practices, hospitals, and ancillary services through serial “roll-up” acquisitions that are structured as smaller deals that often fall below federal review thresholds.¹⁷ While individual transactions may appear limited, their cumulative effect can reduce competition, concentrate market power, and shift control of care delivery away from clinicians and toward financial investors.¹⁸ Evidence links private equity ownership to higher prices, increased patient billing, staffing layoffs, and financial strain on safety net and community providers.¹⁹

States can respond by requiring disclosure of ownership and control structures, mandating review of serial acquisitions, and assessing cumulative market concentration rather than evaluating transactions in isolation.²⁰ These policies help regulators determine who ultimately controls health care assets, identify patterns of consolidation over time, and evaluate how private equity business strategies may affect prices, quality of care, workforce stability, and patient access.

In January 2025, Massachusetts enacted groundbreaking legislation—H.B. 5159, An Act Enhancing the Market Review Process—that improves transparency around private equity ownership.²¹ The law requires notice of material transactions involving provider organizations and enhanced disclosure of corporate ownership and financial relationships, enabling regulators to assess whether serial acquisitions or changes in control may undermine competition or access.²² By increasing visibility into ownership structures and financial incentives, Massachusetts’ approach will help regulators identify roll-up strategies that may otherwise evade scrutiny and allow the state to intervene earlier to protect patients and communities.

Beyond monitoring transactions, states can adopt guardrails that limit the extent to which corporate interests dictate care delivery. These policies address structural incentives that prioritize profit over patients and clinicians.

Corporate practice of medicine laws

Corporate practice of medicine (CPOM) laws restrict nonclinicians from owning or controlling medical practices, helping preserve clinical independence and protect patient-centered decision-making. When effectively enforced, CPOM laws can limit the ability of private equity firms, insurers, and other corporate actors to influence clinical decisions through ownership structures, management agreements, or financial incentives that prioritize profit over patient care.

Oregon recently strengthened its CPOM framework by enacting S.B. 951, one of the most comprehensive laws in the country.²³ The law explicitly prohibits corporate entities from controlling physician decision-making through ownership, compensation arrangements, or restrictive management contracts.²⁴ By clarifying what constitutes impermissible corporate control, Oregon’s approach provides a model for how states can modernize CPOM laws to counter corporatization and safeguard clinical autonomy.

Structural separation

Structural separation laws prevent corporate entities from simultaneously owning or controlling multiple segments of the health care supply chain in ways that create conflicts of interest, encourage self-dealing, or distort prices.²⁵ When vertically integrated entities control both the provision of care and the intermediaries that determine payment or access, they can steer patients to their own practices, suppress competition, and extract profits at the expense of affordability and transparency.²⁶ Structural separation policies seek to realign incentives by limiting ownership arrangements that allow corporate actors to profit from their own pricing, contracting, or utilization decisions.²⁷

In 2025, Arkansas enacted H.B. 1150, which prohibits pharmacy benefit managers (PBMs) from owning or having an ownership interest in pharmacies.²⁸ According to advocates, the law was designed to curb self-dealing practices in which vertically integrated PBM-pharmacy arrangements enable corporations to favor their own pharmacies, reimburse competitors at lower rates, and inflate prices through opaque rebate and fee structures.²⁹ Although the law is currently the subject of ongoing litigation, it underscores the breadth of state authority to regulate corporate structure and address conflicts of interest within health care markets.³⁰ After its passage, similar provisions were introduced in Indiana, New York, Texas, and Vermont.³¹

Medical loss ratio reform

Medical loss ratio (MLR) requirements are designed to ensure that insurers spend a minimum share of premium dollars on patient care and quality improvement, rather than administrative expenses, marketing, or profits.³² Under current federal law, insurers in the individual and small-group markets must spend at least 80 percent of premium revenue on care, while large-group plans must meet an 85 percent standard.³³ When insurers fail to meet these thresholds, they are required to provide rebates to consumers.³⁴

States have the authority to build on federal MLR requirements and could strengthen these standards to curb excessive corporate profits and promote affordability.³⁵ Potential reforms include raising minimum MLR thresholds and expanding rebate requirements when insurers fail to meet spending standards. States could also use enhanced reporting to better track how vertically integrated insurers allocate premium dollars across subsidiaries and service lines. Although no state has yet adopted an MLR standard that is higher than federal law, doing so would represent a meaningful step toward rebalancing incentives in increasingly consolidated insurance markets while also complementing transaction oversight and cost-control efforts.

When market competition fails to constrain hospital prices, states can step in with targeted price regulation. Commercial insurers and employers pay hospitals an average of about 2.5 times Medicare rates, with prices varying widely across and within markets due to concentrated hospital power rather than higher quality.³⁶ Evidence shows that hospitals in concentrated markets charge higher prices that translate into higher insurance premiums.³⁷ Price caps enable states to correct for hospital market power and help ensure that cost savings translate into lower premiums.

Price caps

States can establish price caps or rate review processes that limit how much providers can charge, particularly in highly concentrated markets. These tools help curb price growth even when consolidation has already occurred.

In the 2025 legislative session, states took bold steps to apply reference-based price caps broadly across commercial markets, expanding caps beyond state employee plans to all payers. Vermont became the first state to enact a comprehensive, reference-based hospital price cap applicable to all payers. Under S.126, signed into law in June 2025, the Green Mountain Care Board is required to set upper price limits on hospital services based on a percentage of Medicare rates, with these caps to be set by 2027.³⁸ Indiana’s 2025 legislation similarly applies a reference-based hospital price cap across all payers, but with a different trigger and enforcement mechanism. H.B. 1004 directs the state’s Office of Management and Budget to calculate statewide average inpatient and outpatient hospital prices and requires nonprofit hospitals to align their prices with those benchmarks by June 2029 or forfeit their tax-exempt status.³⁹

As consolidation reshapes health care markets and federal enforcement lags, states have a critical role in restoring balance. Enhanced transaction review, corporate guardrails, and price regulation each address a different dimension of consolidation and corporate control. Together, they enable states to rein in market power and protect affordability and access.

The author would like to thank Andrés Argüello for his contributions.