On June 15, 2026, Vermont Governor Phil Scott signed H.583 into law, establishing Vermont’s first statutory framework specifically addressing private equity (PE) firm and hedge fund influence over clinical decision-making in the health care sector.1 H.583 does not prohibit PE or corporate ownership of health care facilities, but it does restrict decision-making on key clinically related business matters to licensees. Given this, although the bill doesn’t technically create ownership restrictions, it does create restrictions on what the PE or corporate owner can have control over. Whether it will be easier to utilize a PC-MSO structure to comply with the law is a strategy question that we recommend working on with your Ropes & Gray advisor.
As discussed further below, effective March 1, 2027, the law will prohibit PE firms, hedge funds, and certain affiliated entities from influencing clinical decision-making or exercising control over specified operational functions that may affect patient care, while also establishing a new reporting regime requiring disclosure of certain ownership, investment, and control relationships involving Vermont health care facilities and management services organizations (MSOs).
Below are key takeaways for PE sponsors, hedge funds, health care providers, and other stakeholders navigating Vermont’s new regulatory framework.
1. PE and Hedge Fund Investment in Health Care Providers and Facilities Remains Permissible, but Investor Control Is Subject to New Restrictions
While H.583 reflects growing state scrutiny of private investment in health care, it does not restrict PE firm or hedge fund ownership of health care entities. Instead, H.583 focuses on limiting investor influence over clinical decision-making and certain operational functions that may affect patient care.2 The law, which applies broadly across the health care sector—including physician and dental practices, behavioral health providers, substance use disorder treatment programs, hospices, home health agencies, nursing facilities, and pharmacies3—specifically restricts the ability of PE groups, hedge funds, and entities controlled by them to influence certain clinical and operational decisions, including:
- influencing provider judgment regarding diagnoses, referrals, and treatment plans;4
- setting provider productivity expectations, including patient volume and provider work schedules;5
- controlling clinical standards and policies;6
- making provider hiring or termination decisions;7
- determining the parameters under which providers or facilities contract with third-party payers;8
- setting prices or rates for provider services;9
- making coding or billing decisions relating to patient care services;10 and
- selecting or approving the selection of medical equipment or medical supplies.11
The statute also prohibits PE groups, hedge funds, and their affiliates from entering into agreements or other arrangements that would enable them to interfere with provider clinical decision-making or exercise authority over the operational functions identified above.12 Importantly, however, H.583 does not prohibit MSOs or other nonclinical service arrangements. Rather, the statute expressly permits administrative, financial, operational, and advisory services, provided that licensed providers retain ultimate responsibility for clinical decisions and related operational matters. As a result, existing governance arrangements, management services agreements, and other operational oversight mechanisms may warrant review in light of the law’s functional approach to investor influence and control.
2. The Law Creates a New Ownership Transparency Regime for Certain PE-Backed Health Care Entities
Beyond its restrictions on investor influence, H.583 also creates a new ownership transparency regime for certain PE- and hedge fund-backed health care entities. Beginning March 1, 2027, health care facilities and MSOs in which a PE group or hedge fund held an ownership or investment interest as of June 1, 2026 (collectively, “Covered Entities”) must report specified ownership and control information to the Green Mountain Care Board (GMCB).13 Among other things, Covered Entities must disclose the identity of persons and entities holding ownership, investment, or controlling interests, significant equity investors, and affiliated MSOs.14 Covered Entities will also be required to submit organizational charts identifying affiliates, subsidiaries, and other entities within the ownership structure, together with certain financial information, including profit and loss statements and balance sheets.15 Notably, consistent with the legislation’s broader emphasis on ownership transparency, much of the information reported to the GMCB—including ownership, control, and organizational structure information—will be made publicly available on the GMCB website, although submitted profit and loss statements and balance sheets will remain confidential.16 As a result, investors and providers should anticipate increased public visibility into ownership structures and governance arrangements involving Vermont health care facilities and MSOs (not dissimilar from Massachusetts’s process through the Health Policy Commission).
3. The Law Creates New Litigation and Enforcement Risk
In addition to the restrictions described above, H.583 authorizes the Vermont Attorney General to enforce the law’s reporting requirements and seek civil penalties and injunctive relief for noncompliance. Covered Entities that fail to make required disclosures may be subject to daily penalties, while material misrepresentations in required filings may result in penalties of up to $10,000 per year for failure to report the required information and $25,000 for material misrepresentations made in the report.17
Perhaps most significantly, the statute creates a private right of action permitting health care providers to challenge conduct that allegedly violates the law’s restrictions on investor influence over clinical and operational decision-making, with available remedies including equitable relief, actual damages, costs, and attorney’s fees.18 Given the broad and in some respects subjective nature of several of the statute’s prohibitions, health care providers may seek to use the statute to challenge governance rights, management arrangements, or operational oversight practices they view as inconsistent with the law, potentially increasing litigation risk for investors and affiliated health care entities. As a practical matter, the combination of public reporting requirements, Attorney General enforcement authority, and a private right of action may create additional avenues for scrutiny of ownership structures, governance arrangements, and investor oversight practices involving Vermont health care entities.
Conclusion
In sum, although H.583 stops short of imposing ownership restrictions comparable to those adopted in certain other states, its limitations on investor influence over clinical and operational decision-making, coupled with its new ownership transparency requirements, will require PE sponsors, MSOs, and health care providers to carefully evaluate existing governance structures, management arrangements, and compliance practices. These considerations should be reviewed with experienced counsel in advance of the law’s March 1, 2027 effective date.
***
Ropes & Gray will continue to monitor developments relating to Vermont’s evolving corporate practice enforcement landscape and broader regulatory trends affecting health care ownership structures and MSO-PC arrangements. Please contact the authors or your trusted Ropes & Gray advisor with any questions regarding the issues discussed above.