State oversight slows private equity’s push into healthcare

# What changed and why it matters State-level laws and regulations passed in recent years are slowing private equity (PE) investment activity in healthcare. PitchBook, which tracks private capital markets, reports fewer PE-involved healthcare deals since 2025 and lower deal value in the first half of 2026 compared with the same period in 2025.

New oversight is increasing the time and cost of transactions. Regulators are adding documentation, transparency requirements, and restrictions on how nonphysician-controlled entities can operate medical groups. That makes roll-up strategies, where PE consolidates many smaller providers into larger companies, harder to execute.

# Which states and rules are involved At least 25 states have proposed or enacted oversight measures related to healthcare transactions. Examples with new rules or laws taking effect in 2026 include California, Oregon, and Rhode Island. Last year seven states passed guardrails aimed at PE in healthcare: California, Indiana, Massachusetts, Maine, New Mexico, Oregon, and Washington.

# Sectors hit hardest Physician practice management—companies that handle administration like billing and scheduling—has the largest PE footprint in healthcare and is facing the steepest drop. PitchBook data indicates deals in that segment are on track to decline by roughly half in 2026 versus 2025.

Nursing homes are another focus of state action because of high-profile failures and public outrage tied to closures, neglect, and quality problems. Several states tailored rules specifically at nursing home accountability for PE owners.

# Data and research cited

• PitchBook: fewer PE-involved healthcare deals and lower deal value in H1 2026 vs. H1 2025. Procedural hurdles and higher transaction costs cited as reasons for the decline.
• Over the past decade, PE firms spent about $1 trillion acquiring healthcare companies.
• A 2023 study found PE involvement increased nursing home mortality by 11%.
• A 2022 Moody's report found nearly 90% of financially stressed healthcare companies are PE-owned.

These studies and reports are part of the evidence state policymakers cite when considering new rules.

# Policy and oversight environment States are moving even as federal attempts at new legislation have not produced broad new laws. State attorneys general and regulators argue that expanded oversight gives them the ability to spot transactions that could reduce access to care or raise costs. Rhode Island Attorney General Peter Neronha framed new requirements as a way to get a "bird's eye view" of mergers to protect patient access.

PE proponents argue their capital fills gaps—upgrading technology and streamlining operations—but the available research has shown mixed or negative effects in several settings.

# What to watch next Expect continued state-level activity: lawmakers in Hawaii, Indiana, New York, Pennsylvania, Vermont, and Virginia proposed bills adding oversight this year. Monitoring PitchBook and state regulatory rollouts will show whether the decline in deals persists and how PE firms adjust deal structures to meet new requirements.