From Washington to Rhode Island: Understanding new requirements for medical group governance

The urology profession has undergone significant transformation in recent years. Today, the profession reflects a diverse array of operational models, including independent physician groups, academic medical centers, and practices that have entered into partnerships with Management Service Organizations (MSOs) or private equity (PE) investors.

In many cases, these partnerships have provided practices with access to capital, operational support, and administrative infrastructure that allow physicians to focus more directly on patient care (Fig. 1). At the same time, the growth of these models has drawn increased attention from policymakers seeking to clarify governance structures within health care practices, as core priorities can differ between [clinicians] and investment partners.

In early 2026, the AACU has identified a notable uptick in legislative activity related to the “Corporate Practice of Medicine” (CPOM) doctrine. These bills generally seek to define the boundaries between corporate investment and clinical practice, particularly with respect to governance structures and physician authority over clinical decision-making.

Market forces driving structural change in urology

The renewed focus on CPOM policy is occurring alongside broader economic and structural changes affecting physician practice.

Across many specialties, including urology, practices are navigating a combination of pressures: declining Medicare reimbursement, growing need for back-office and administrative support to facilitate prior authorizations and after-hours patient communications, and the increasing need for capital investment in technology, infrastructure, and operational systems. These are challenging hurdles that are difficult to navigate both operationally and financially and make the value proposition of a partnership with a cash-rich entity highly appealing. Additionally, aging physician ownership cohorts are seeking liquidity for longitudinal equity from years in private practice as they arrive at or near retirement age.

These factors have contributed to a growing interest in partnerships with health systems, MSOs, and private investment groups. In urology specifically, the specialty’s mix of outpatient procedures and ancillary services has also made it an area of particular interest for investment and operational partnerships. Investment partners traditionally place a high value on shorter duration, highly-reimbursed, and cash pay procedures (Fig. 2).

While these arrangements can provide practices with additional resources for growth, technology adoption, and administrative support, they have also prompted policymakers to revisit long-standing doctrines governing medical practice ownership and physician authority.

A unified national voice: Leveraging AMA guidance

The AACU’s monitoring of these developments reflects broader national conversations regarding physician autonomy and medical practice governance. Recently, the American Medical Association (AMA) reinforced its guidance on corporate relationships in medicine, emphasizing that physicians must retain ultimate responsibility for clinical decision-making.

It is important to keep in mind that influence on clinical-decision making, often representing the most downstream aspect of the care delivery model, is only one of many distinct areas an investment partner may exert influence. Specifically, through strategic capital allocation and leadership change within the C-suite, a private equity firm may steer high-level business functions such as marketing or sales efforts, influence technology investment, or green-light certain capital expenditures (e.g., buildings, ambulatory surgery centers, clinics). In this way, a partner can prioritize a particular procedure mix or patient population, thus exerting upstream influence before the patient even arrives in the clinic. Nonetheless, this national framework provides an important reference point and is an excellent first step in clarifying policy for specialty societies, including the AACU, as they evaluate emerging state-level legislative proposals.

State-level case studies: A new wave of oversight

From the Pacific Northwest to New England, several state legislatures are considering statutory changes affecting health care practice ownership and governance.

Washington State
2SSB 5387 focuses on the MSO and Professional Service Corporation (PC) structure commonly used in health care partnerships. The legislation proposes new governance requirements intended to clarify the role of physicians in maintaining clinical independence within investor-supported practice structures.

Rhode Island
Introduced in February 2026, the “Rhode Island Ban on the Corporate Practice of Medicine Act” (SB 2459 / HB 7721)would prohibit unlicensed entities from owning medical practices. The legislation requires licensed physicians to maintain majority voting control and board representation within physician practices, reinforcing existing CPOM principles regarding physician governance.

Vermont
Introduced in January 2026, H.583 focuses on financial structuring in health care acquisitions. The proposal would prohibit certain debt arrangements in private equity transactions if those obligations are transferred to the acquired physician entity. It also includes provisions intended to clarify that investors may not interfere with physicians’ clinical judgment.

Illinois
In Illinois, HB 5000 / SB 3463 seek to expand reporting requirements related to health care transactions. The legislation would require a 30-day pre-closing notification for transactions involving health care entities, providing state regulators greater visibility into ownership changes and investment activity in the health care sector.

The AACU stance: Monitoring developments across practice models

The AACU recognizes that urologists practice in a wide range of organizational environments, including independent groups, health systems, and investor-supported partnerships. Many physicians have found operational, financial, and administrative benefits in these diverse models.

Accordingly, the AACU does not take a categorical position on specific business structures. Our focus is ensuring that urologists, regardless of practice model, retain the ability to exercise independent clinical judgment and deliver high-quality patient care.

As legislative proposals in Washington, Rhode Island, Vermont, and Illinois continue to evolve, the AACU will monitor developments closely to assess their potential implications for urologists across practice settings.

Conclusion

2026 is shaping up to be an important year for the regulation of health care ownership and governance. As the corporate practice of medicine becomes a focal point in statehouses across the country, the AACU encourages its members to stay informed about legislative developments that may influence practice operations and governance structures.

Policymakers and health care stakeholders alike are increasingly focused on ensuring that investment and innovation in health care delivery can continue while preserving the physician’s central role in clinical decision-making.

The outcome of these policy discussions will help shape the evolving relationship between physicians, health care organizations, and investment partners in the years ahead.