As states tighten oversight, private equity’s healthcare deals decline

New state oversight laws are pumping the brakes on private equity’s push into healthcare, according to new data.

The number of private equity-involved healthcare deals has declined since last year, and the value of those deals in the first half of 2026 is lower than it was for the same time in 2025, according to a new report from Pitchbook, a company that tracks private capital markets and investment data.

The report’s authors say that a slew of new state laws is one reason why.

At least 25 states have proposed or passed laws increasing oversight of healthcare transactions in recent years, restricting the power of companies that are not run by physicians to control medical practices, or limiting how private equity and other companies can operate.

California, Oregon and Rhode Island each had new laws or regulations take effect this year that require more documentation and transparency on mergers, acquisitions and other deals among healthcare companies.

“[P]rivate equity and increasing market consolidation drive up the cost of care, further inhibiting patient access,” Rhode Island Attorney General Peter Neronha, a Democrat, said in a January statement announcing his state’s new regulation.

Neronha said the new oversight will give his office “a bird’s eye view to ensure that future medical group mergers do not harm Rhode Islanders’ access to health care services.”

Private equity might dodge state laws by partnering with healthcare nonprofits

New state laws and regulations have made the purchase of healthcare companies and other similar financial transactions take longer and cost more, PitchBook analysts found. And rolling up smaller companies into larger conglomerates — a consolidation strategy that private equity has relied on in myriad industries, including healthcare — is harder to do under tighter state scrutiny.

The healthcare sector hit hardest by the new private equity rules is physician practice management, or companies that perform administrative tasks such as patient scheduling and billing. Deals in that corner of healthcare, the sector in which private equity has the largest role, are on track to decline by half this year, compared with 2025.

Last year, at least seven states (California, Indiana, Massachusetts, Maine, New Mexico, Oregon and Washington) enacted laws that built guardrails around private equity’s involvement in healthcare.

Some states have targeted private equity in specific areas of healthcare: Earlier this year, Connecticut passed what may be the strongest law in the country to address accountability and transparency for private equity-owned nursing homes.

Lawmakers in Hawaii, Indiana, New York, Pennsylvania, Vermont and Virginia all proposed bills this year that would add oversight of healthcare transactions or limit how private equity is allowed to operate.

In the past decade, private equity investors have spent $1 trillion acquiring healthcare companies.

After nursing home crises, states target private equity’s role

This increased state oversight has followed mounting public outrage over hospital closures, nursing home crises, patient abuse and neglect, and other failures that regulators have tied to private equity’s involvement in healthcare.

Proponents of private equity say its investments fill critical gaps in the U.S. health care system, providing much-needed capital to help hospitals and physicians upgrade technology and streamline their processes.

But research has found few positive effects. One large 2023 study found that private equity involvement increased the nursing home death rate by 11%. Other studies have linked private equity involvement to increases in emergency room visits and rising Medicare costs. A 2022 Moody’s Investors Service report found that almost 90% of financially stressed health care companies are owned by private equity.

States have stepped in to regulate, even as congressional investigations have not yielded new federal laws.

Stateline reporter Anna Claire Vollers can be reached at [email protected]