A bill barring private equity firms, hedge funds, and other corporate entities from directing medical decisions at the healthcare facilities they invest in was signed into law Monday by Vermont Gov. Phil Scott.
Under the new law, healthcare companies must make their ownership structures and investor relationships publicly available, according to The Wall Street Journal. Before its passage, Vermont stood apart from most states in having neither ownership transparency rules nor any prohibition on corporations directing medical care.
Rep. Alyssa Black, the Democrat from Essex who sponsored the bill, said the goal is to prevent profit-driven investors from undermining the state's struggling medical system. "We are at a critical point where our system of healthcare is precariously on the edge," she said. "This desperate situation makes us vulnerable to bad actors coming in for investment."
Joining Oregon and California, Vermont is the third state to tighten rules on the corporate practice of medicine since early last year. Separately, Massachusetts and Indiana have moved to subject private equity's healthcare deals to greater regulatory review, while Connecticut enacted legislation last month aimed at a financial maneuver that critics contend private equity firms deploy to pull cash out of hospitals.
What ultimately passed was a substantially narrower measure than what lawmakers first proposed — the original draft would have shut private equity out of Vermont's healthcare market altogether. Healthcare lobbyists mounted what Rep. Black called "overwhelming" opposition, forcing sponsors to scale back the bill's ambitions considerably. The reporting rules do not apply to every type of provider: nursing homes, organizations whose services are delivered exclusively through telehealth, and federally qualified health centers all fall outside their scope, according to vtdigger.
Looking ahead, Rep. Black has her sights set on additional legislation, among them a prohibition on the friendly physician model — a legal arrangement she says functions as a "loophole" that lets investors work around medical practice rules. She acknowledged the effort will not be quick, saying, "This is going to be a multiyear process."
The new law arrives as private equity has spent roughly $1 trillion over the past decade acquiring hospitals, nursing homes, and medical practices, with limited oversight. The collapses of Steward Health Care and Prospect Medical Holdings — two hospital operators with deep private equity ties that went bankrupt in 2024 and 2025, shuttering facilities and leaving taxpayers to absorb tens of millions in losses — proved a significant catalyst for the wave of state-level legislation.
At its meeting last week, the AMA — whose membership of more than 270,000 physicians makes it the country's largest physician organization — passed measures calling for a federal ban on corporate meddling in clinical care and taking aim at legal arrangements that private equity firms frequently use to gain footholds in medical practices.