The number is striking, and it is already being cited as proof that the crackdown works. Investments in physician practice management, the companies that run doctors' billing and operations, plummeted from a high of 851 deals in 2021 to 105 in the first half of 2026, and the sector is on track for about half of 2025's volume. STAT's reporting ties the collapse to a new reality: more than a dozen states have passed laws enhancing oversight of private equity deals in health care, and the new PitchBook data behind the numbers shows a deal market in retreat. Paul Pitts, a partner at Reed Smith who works with health care providers, put it plainly: "It's certainly been a big decrease."
A big decrease in counted deals is a real fact. The question is what it measures. The state laws that are supposedly doing the curbing do not regulate consolidation in the abstract; they regulate a label: private equity, defined by who owns the equity, how much of it they own, and what the management agreement says. The deal count tracks that label, and a count that tracks a label can fall while the thing the label refers to keeps happening in a different form. The relevant question is not whether the number fell. It is whether physician practices are less consolidated, or merely owned by someone the statutes do not name.
What exactly went down
Start with what the data shows. The 851-to-105 figure comes from PitchBook, which classifies deals by investor type, and it is a real decline within that category. The broader picture is softer than the headline: health care services deals overall fell about 18.5 percent year over year in the second quarter, and the report's own subtitle attributes the weakness to macroeconomic headwinds, higher interest rates, and softer patient volume, not primarily to the new laws. Practice management was the laggard among sectors, with vision and fertility the few bright spots, and the decline began before the most aggressive statutes took effect. California's two landmark laws, SB 351 and AB 1415, took effect January 1, 2026, and the 2025 numbers were already down 18 percent.
So the state laws are part of the story, not the whole story, and even the part they own deserves care. The laws do not ban private equity from health care; they do what regulatory statutes in this space usually do, define the trigger. California's AB 1415 subjects private equity firms, hedge funds, and management services organizations to the state's transaction review authority, with 90 days' notice for material changes, and SB 351 extends corporate practice of medicine restrictions to private equity and hedge funds, barring investors from controlling clinical decisions, staffing, coding and billing terms, and patient records. Oregon, Rhode Island, Illinois, and Washington have passed their own versions, with pre-closing notices, expanded attorney general powers, and reporting. These are real constraints on one way of doing deals.
The trigger tracks the label, not the reality
Here is the point that matters. Every one of those laws draws its boundary with reference to the private equity label: an owner type, an ownership threshold, a list of prohibited controls. A deal that would trip the trigger one way can be structured another way, and the market for physician practices is one of the most structured markets in commerce. The same economic outcome, outside capital taking an interest in a practice in exchange for management services and a share of revenue, can be arranged as a minority stake, a consulting agreement, a joint venture with a hospital system, an employment relationship, or a deal with a family office that does not call itself private equity. None of those forms shows up in the private equity deal count, and several do not trip the statutes' triggers.
That is not speculation; it is a description of the market. The largest acquirers of physician practices in the United States have never been counted as private equity deals, because they are health insurers and hospital systems buying practices directly. Optum, the health services arm of UnitedHealth Group, and CVS Health have spent years absorbing practices into employment arrangements, as have regional hospital systems building out physician networks. A practice that sells itself to an insurer or a hospital was never in the 851 and is not in the 105; it sits outside the count in both directions. The count measures one channel of consolidation, and it is not the biggest one.
The enforcers already see through the form
The strongest evidence that the label is leaky comes from the enforcers, who have concluded that policing the label is not enough and now police the substance. California's attorney general has shifted what legal commentators describe as enforcement from sporadic to systematic, pursuing not just private equity funds but the management services organizations and lenders around them. A May 2026 settlement with Aspen Dental Management required $2 million in penalties and $300,000 in restitution and barred revenue-based fees, ownership of practice real property, and control over staffing and practice owners. A pending fertility case could establish that any arrangement giving a lay entity the right to replace a physician owner is unlawful per se. The pattern is the same throughout: the form of the deal, whether it calls itself private equity or not, is secondary to who controls clinical decisions and where the money flows.
That is precisely what the falling deal count cannot capture. When the attorney general and the legislature both say the label is not the real subject of their concern, a count of labeled deals becomes a weaker instrument for measuring whether the concern is being addressed. The count tells you how often the trigger fired, nothing about how often the reality it was built to police moved to a form it cannot see, and the enforcers' shift to substance over form is an admission that they believe the movement is happening.
Two readings of the same drop
Both readings of the decline deserve to be stated at their strongest, and this analysis takes no position between them. Proponents of the oversight laws see the numbers as evidence of deterrence working: scrutiny has raised the cost and risk of the most aggressive acquisition structures, some deals that would have happened are not happening, and physicians and patients are protected from the practices that drew the criticism, revenue-based fees, restrictive covenants, and control by investors with no clinical stake. On that reading, 851 to 105 is a policy success measured in prevented transactions.
Skeptics see the same numbers as evidence of something more ambiguous: capital does not leave a market because a form becomes expensive; it changes form. A practice that a fund would have bought two years ago can be bought by an insurer, a hospital system, a family office, or a lender using a structure the statutes do not reach, with less visible consolidation, fewer public deal counts, and less transparency than the private equity channel had. On that reading, the drop in counted deals is not the end of consolidation but its migration to channels where the new laws do not look, and the transparency problem the laws were meant to solve gets worse because the counted channel shrank.
What both sides should be able to agree on
The two readings share a foundation, and it is where a neutral analysis can stand. Whatever one believes about private equity in health care, everyone should want the measurement to track the substance rather than the label. If the goal of the state laws is to police consolidation, the metric of success cannot be a count of deals that carry the private equity name, because that count falls when consolidation changes its paperwork as well as when it stops. Proponents should want the follow-up data: where are the practices going, who owns them, who controls clinical decisions, what fee structures are attached. Skeptics should want exactly the same data; it is the only evidence that would show whether their worry, consolidation moving into the shadows, is real. Both sides lose if the debate settles for the 851-to-105 number as proof of anything.
The smallest part of the story
The drop from 851 to 105 is a real change, and the state laws that produced part of it are a real shift in how health care deals are regulated. But the count is the smallest part of the story, because it counts a category and the category is not the thing the laws were written to control. Private equity was never the only buyer of physician practices, and the structures that carry its label are not the only ones that deliver the same economic reality: outside capital, management services, and a share of revenue, arranged by contract. The states that passed the laws know this; their enforcers are already arguing that form must yield to substance. The deals that fell out of the count may have disappeared, or they may have changed form, and the difference between those two outcomes is the entire question, one that no deal count can answer. The number that will tell the real story is not the number of private equity deals; it is the number of physician practices, and who controls them, and that number is still being written.
Primary sources
- STAT's reporting by Tara Bannow, for the headline facts: the 851-deal peak in 2021, the 105 deals in the first half of 2026, the expectation of about half of 2025's volume, the count of more than a dozen states with enhanced oversight laws, and the quotation from Reed Smith partner Paul Pitts.
- The PitchBook Q2 2026 Healthcare Services Report, for the underlying deal data, the 18.5 percent year-over-year decline, the attribution of weakness to macroeconomic headwinds, interest rates, and utilization, the lagging performance of practice management, and the bright spots in vision and fertility.
- Legal commentary on California's SB 351 and AB 1415 and related statutes in Oregon, Rhode Island, Illinois, and Washington, for the specifics of how the laws define private equity, management services organizations, notice requirements, and control prohibitions.
- Analysis of California attorney general enforcement, for the Aspen Dental Management settlement, the pending Art Center Holdings appeal, and the shift from sporadic to systematic enforcement with an emphasis on substance over form, and general reporting on physician practice consolidation by insurers such as Optum and CVS Health and by hospital systems.